January 2, 2020 / 10:59 AM / 21 days ago

PRECIOUS-Gold rises back towards 3-month high, markets eye Fed minutes

 (Updates prices)
    * Fed December meeting minutes due at 1900 GMT on Friday
    * Dollar index holds near six-month low

    By K. Sathya Narayanan
    Jan 2 (Reuters) - Gold firmed on Thursday, edging back
towards the three-month peak it reached earlier in the week on
the back of dollar weakness, with the market focusing on minutes
of the U.S. Federal Reserve's December policy meeting.
    Spot gold        was up 0.4% to $1,523.12 per ounce as of
1248 GMT, having touched its highest since Sept. 25 at $1,525.20
on Tuesday. U.S. gold futures         were up 0.2% at $1,525.80.
    "We are seeing a bit of a bounce-back in the dollar but if
you look at the movements that we saw (in the past few days), it
is probably supporting gold in the interim," said OANDA analyst
Craig Erlam.
    The negative correlation between the dollar and bullion is
what really propelled gold from $1,480 to $1,520, he said, but
further upside in the U.S. currency could put pressure on gold.
    Against key rivals, the dollar        was up 0.3% this
session, but was trading not far from the six-month low it
touched on Tuesday.       
    Beijing's decision to ease monetary policy further supported
bullion, Erlam added.
    China's central bank on Wednesday said it was cutting the
amount of cash that all banks must hold as reserves, releasing
funds to shore up the slowing economy.             
    Bullion prices posted their biggest annual rise in nearly a
decade in 2019, boosted by the drawn-out trade war between the
United States and China that dragged on global economic growth.
    Many analysts said prices were likely to rise further in
2020, with shaky growth and global stock markets potentially
looking unsustainable at record highs.                         
    "A key thing to look out for is stock markets, which have
been setting new highs," said Brian Lan, managing director at
dealer GoldSilver Central in Singapore. "In case there is some
correction, we (could) see some capital flows into gold."
    Brexit, the U.S. presidential election, protests in Hong
Kong and tensions with North Korea would be the other key
factors for the market this year, he said.
    Investor focus has now turned to the minutes of the Federal
Reserve's Dec. 10-11 policy meeting, due at 1900 GMT on Friday.
Lower interest rates encourage the buying of non-interest-paying
bullion.
    "Friday's U.S. manufacturing ISM and the December Federal
Open Market Committee (FOMC) minutes could provide an impulse,"
Stephen Innes, a market strategist at AxiTrader said in a note.
    Among other precious metals, silver        gained 0.5% to
$17.92 per ounce, while platinum        rose 1.7% to $979.65 and
palladium        edged up 0.4% to $1,947.37 per ounce.

 (Reporting by K. Sathya Narayanan and Sumita Layek in
Bengaluru; Editing by Jan Harvey)
  
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