August 18, 2016 / 10:15 AM / 3 years ago

PRECIOUS-Gold up as Fed minutes cool rate hike prospects, weigh on dollar

* Silver, platinum off three-week lows
    * SPDR Gold holdings fall 0.5 percent on Wednesday
    * GRAPHIC-2016 asset returns:

 (Adds comment, byline, NEW YORK dateline; updates prices)
    By Marcy Nicholson and Clara Denina 
    NEW YORK/LONDON, Aug 18 (Reuters) - Gold rose on Thursday,
buoyed by a weaker dollar after minutes from the U.S. Federal
Reserve's July meeting showed policymakers were divided over
whether to raise interest rates soon.
    Members of the Fed's rate-setting Federal Open Market
Committee were generally upbeat about the U.S. economy and labor
market, but several said any slowdown in future hiring would
augur against a near-term hike. 
    "The markets have decided that the Fed took a rather dovish
tone this time," said George Milling-Stanley, Head of Gold
Strategy at State Street Global Advisors. "I think that's why
the dollar is down and why gold is up."
    Spot gold was up 0.3 percent at $1,351.98 an ounce by
2:39 p.m. EDT (1839 GMT), on track for a fourth straight day of
    U.S. gold settled up 0.6 percent at $1,357.20 per
    "The market has been trying to read into whether Fed
official comments for a September rate hike will be repeated by
Janet Yellen next week, but there is no clarity yet," Saxo Bank
senior manager Ole Hansen said. 
    "As a result, gold is supported, but struggling to break
above $1,357 - the next technical resistance level," he added.
    The dollar eased 0.6 percent against a basket of six major
currencies, after plunging to its lowest in over seven
    A weaker dollar makes gold cheaper for holders of other
    Reports showed the number of Americans filing for
unemployment benefits fell more than expected last week while
manufacturing activity in the U.S. Mid-Atlantic region saw a
mild improvement this month. 
    New York Fed President William Dudley said strong recent
U.S. job growth and a long-awaited return of middle-wage
employment are two positive signs for the labor market,
appearing to reinforce his more confident message on a possible
interest rate hike. 
    Gold is sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets, such as
    Holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell 0.46 percent to 957.78
tonnes on Wednesday. 
    The Chicago Mercantile Exchange on Wednesday lowered COMEX
100 Gold Futures (GC) maintenance margins for speculators by 10
percent to $5,400 per contract from $6,000 for August and
September 2016. 
    Silver was up 0.6 percent at $19.79 an ounce, after
touching a more than three-week low on Wednesday.
    Platinum rose 1.6 percent at $1,130.50, after hitting
a three-week low of $1,099.74 in the previous session, while
palladium was up 3 percent at $712.70.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
editing by Adrian Croft and G Crosse)
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