October 12, 2017 / 4:06 AM / 9 months ago

PRECIOUS-Gold prices hit 2-week high amid subdued dollar

    * Spot gold may test resistance at $1,299/oz- technicals
    * Dollar index hits lowest since Sept. 26

 (Updates prices, adds MKS trader's comment)
    By Apeksha Nair
    Oct 12 (Reuters) - Gold prices rose to their highest in two
weeks on Thursday amid a muted dollar, after minutes from the
Federal Reserve's latest policy meeting showed the U.S. central
bank was concerned over low inflation.  
    Spot gold        was up 0.2 percent at $1,294.56 an ounce by
0657 GMT, after earlier marking its best since Sept. 27 at
    U.S. gold futures         for December delivery climbed 0.6
percent to $1,297.20 per ounce.
    "Gold prices rose slightly as the market appeared to take
the Fed minutes as slightly dovish. In particular, it was the
comments on persistently low inflation that seemed to gain much
attention. This saw the U.S. dollar weaken slightly, increasing
investor appetite for the precious metal," ANZ analysts said in
a note.
    Fed policymakers had a prolonged debate about the prospects
of a pickup in inflation and slowing the path of future interest
rate rises if it did not, minutes from the U.S. central bank's
last policy meeting on Sept. 19-20 released on Wednesday showed.
    The dollar hit its lowest in over two-weeks against a basket
of currencies on Thursday following the news.       
    Several policymakers said they would focus on upcoming
inflation data over the next few months when deciding on the
central bank's future rate hike path. 
    U.S. short-term interest rate futures were steady on
Wednesday as traders stuck to their bets on a possible rate hike
in December.       
    "Although it seems likely that the FOMC will increase rates
in December, the upcoming U.S. inflation data will be closely
watched...with softer than expected data expected to provide
bullion with impetus for a sustained push back above $1,300,"
MKS PAMP trader Sam Laughlin said in a note.          
    Gold is highly sensitive to rising interest rates, as these
tend to boost the dollar, the currency in which the metal is
    "Investors' concerns over escalating tensions between the
United States and North Korea remain high," ANZ analysts noted.
    Trump has "lit the wick of war" with North Korea and his
country will be made to pay with "a hail of fire", a Russian
news agency quoted North Korea's foreign minister as saying on
    "If people are not too worried about the Fed's policy, we
have North Korea. Surely, geopolitical tensions are supporting
prices ... we may try $1,300 next week," said Yuichi Ikemizu,
Tokyo branch manager at CIBC Standard Bank.
    Spot gold may test resistance at $1,299 per ounce, with a
good chance of breaking above this level and rising more towards
the next resistance at $1,305, Reuters technicals analyst Wang
Tao said.             
    Silver        rose 0.3 percent to $17.21 an ounce.
    Platinum        was 0.3 percent higher at $930.50 an ounce,
after marking an over two-week high earlier in the session. 
    Palladium        fell 0.4 percent to $955.65 an ounce.

 (Reporting by Apeksha Nair in Bengaluru; Editing by Vyas Mohan
and Biju Dwarakanath)
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