Gold Exceeds $1,750 As Fed Members Urge Slower Rate Increases

The dollar fell on Thursday as the minutes of the most recent Federal Reserve meeting indicated that an increasing number of members advocated a slower rate of interest rate hikes.

The minutes, which were released on Wednesday, indicated that the Federal Reserve was growing increasingly concerned about the implications of its recent tightening of monetary policy on the economy and inflation. This year, the benchmark interest rate was raised by 375 basis points (bps), with four consecutive hikes of 75 bps.

However, markets now assign a likelihood of over 80% that the central bank will raise rates by a relatively small 50 basis points in December.

At 19:05 E.T., spot gold jumped 0.2% to $1,753.40 per ounce, while gold futures increased 0.2% to $1,350 per ounce (00:05 GMT). On Wednesday, following the release of the minutes, both assets increased by around 0.6%, while the dollar declined by 1%.

As inflation continues to trend well over the 2% annual target, Fed officials remain uncertain about the level at which U.S. interest rates will peak during this cycle of rate rises.

Next month's CPI inflation data for November will indicate if the nation's inflation rate is falling gradually. However, the strength of consumer spending and the labor market suggests that inflation in the next months may be higher than anticipated.

Notwithstanding, the likelihood of fewer rate hikes by the Fed is good for metal markets, given that this year's big increases in interest rates have significantly raised the opportunity cost of holding non-yielding assets.

Platinum futures increased by 0.2%, whilst silver futures increased by 1.0%.

As a major importer, China is seeing a decline in demand for industrial metals, limiting the sector's growth.

Following a 0.5% advance in the previous session, copper futures decreased 0.1% on Thursday.

While dollar weakness aided copper prices, concerns over China's largest COVID-19 outbreak to date dampened metal demand. As a result of a record-breaking surge in daily infections, the country has enacted new restrictions in a number of major cities this month.

Indications of a tighter copper supply this year have been mostly offset by Chinese demand.