Gold gains on dollar retreat ahead of Fed minutes

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Aug 17 (Reuters) – Gold prices inched higher on Wednesday as the U.S. dollar pulled back, with investors awaiting minutes from the Federal Reserve’s last policy meeting that could offer clues on further interest rate hikes.

Spot gold rose 0.2% to $1,778.53 per ounce, as of 0511 GMT, after hitting its lowest since Aug. 8 at $1,770.86 on Tuesday.

U.S. gold futures gained 0.2% to $1,793.20.

The dollar slipped 0.1% against its rivals, making gold less expensive for other currency holders.

“Focus is on minutes from the July Federal Open Market Committee meeting and the Jackson Hole Symposium on Aug. 25-27. Both these events will set the stage for Fed meeting in September,” said Ilya Spivak, a currency strategist at DailyFX.

“If we are going to get a more hawkish view from the Fed on rate hikes, that’s going to be somewhat negative for gold in terms of its core appeal for investors.”

The minutes of the Fed’s July 26-27 policy meeting are due at 1800 GMT.

The U.S. central bank has raised its benchmark overnight interest rate by 225 basis points in total since March to tame high inflation.

Traders were pricing in around a 42.5% chance of a 75-basis-point rate hike and a 57.5% chance of a 50-bp increase at the Fed’s next meeting on Sept. 20-21.

Although gold is seen as a hedge against inflation, rising U.S. interest rates dull non-yielding bullion’s appeal.

Despite signs of easing inflation in the world’s largest economy, Fed officials have maintained a hawkish tone on future rate hikes that has led to a pullback in gold prices from the key $1,800 level.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.18% to 992.20 tonnes on Tuesday, its lowest since January.

Elsewhere, spot silver rose 0.3% to $20.17 per ounce, platinum gained 0.2% to $936.55, and palladium climbed 0.3% to $2,159.82.

(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)

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