Investing.com - Gold prices pushed higher in European trade on Thursday, reversing overnight losses, as the U.S. dollar tumbled after minutes of the Federal Reserve's July policy meeting prompted market players to push back expectations for the next U.S. rate hike.
Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $8.65, or 0.64%, to trade at $1,357.45 a troy ounce by 3:02AM ET (07:02GMT), after falling $8.10, or 0.6%, on Wednesday.
Odds for a near-term rate hike faded after the minutes of the Fed’s July policy meeting, released on Wednesday, showed that policymakers were still divided over the need to raise rates this year.
According to the minutes, some voting members expect that a U.S. interest rate increase will be needed soon, although there is general agreement that more data is needed before such a move.
Fed funds futures are currently pricing in just a 9% chance of a rate hike by September, compared to 15% the day before. December odds were at around 46%, down from 53% a day earlier, according to Investing.com's Fed Rate Monitor Tool.
Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
The dollar sank to 7-week lows against the yen and euro on Thursday amid reduced expectations for a Fed rate hike before the end of the year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell to 94.36, the lowest since June 24. It was last at 94.48.
Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Market players will pay close attention to comments from a few Fed officials later in the day. New York Federal Reserve President William Dudley speaks at 10:00AM ET (14:00GMT), San Francisco Fed President John Williams will deliver a speech in Anchorage, Alaska, at 4:00PM ET and Dallas Fed President Robert Kaplan speaks at 8:00PM ET.
Besides the Fed speakers, traders will be watching closely when weekly jobless claims are released at 8:30AM ET (12:30GMT). The Philadelphia Fed survey is also released at 8:30AM.
For the year, the precious metal is up nearly 26%, boosted by concerns over global growth and expectations of monetary stimulus.
Also on the Comex, silver futures for September delivery climbed 14.0 cents, or 0.71%, to trade at $19.78 a troy ounce during morning hours in London, while copper futures gained 2.2 cents, or 1.02%, to $2.174 a pound.