Gold futures decline as stronger dollar, Fed rate outlook weigh

Investing.com - Gold prices were lower on Thursday, after minutes of the Federal Reserve's October policy meeting indicated that officials believe the economic recovery is strong enough to withstand external threats to growth.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery lost $8.20, or 0.69%, to trade at $1,185.70 a troy ounce during European morning hours.

Futures were likely to find support at $1,146.00, the low from November 14, and resistance at $1,204.10, the high from November 18.

Fed officials largely agreed that the economy was improving and no longer needed stimulus tools such as asset purchases, though concerns persisted that inflation expectations may be dipping, according to the minutes released Wednesday.

While the minutes offered little additional clarity about when rates could start to rise, markets continued to bet that the U.S. central bank will start raising rates sometime around September 2015.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

The US dollar index, which tracks the greenback against a basket of six major rivals, was up 0.32% to trade at 87.97.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

A day earlier, gold prices retreated $3.20, or 0.27%, to settle at $1,193.90 an ounce, after a poll showed weaker support among Swiss voters for a referendum that would require the Swiss National Bank to boost its gold reserves.

Support for the "Save our Swiss gold" proposal declined to 38% in a poll released Wednesday, down from 44% in a survey conducted last month.

Swiss voters go to the polls on November 30 to decide whether the SNB would have to hold at least 20% of its assets in the precious metal, up from 8% now.

Also on the Comex, silver futures for December delivery slumped 20.9 cents, or 1.28%, to trade at $16.08 a troy ounce.

Later in the day, the U.S. was to release data on initial jobless claims, consumer prices, existing homes sales and manufacturing activity in the Philadelphia region.

Elsewhere in metals trading, copper for December delivery declined 1.8 cents, or 0.59%, to trade at $3.027 a pound, after data showed that manufacturing activity in China hit a six-month low in November.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.