LONDON: Gold pared losses on Thursday as buoyant physical demand offset pressure from the stronger dollar, after minutes of the Federal Reserve's July policy meeting kept alive bets the bank would taper monetary stimulus in September.
The minutes of the Fed's July 30-31 meeting, released on Wednesday, showed that a few officials thought last month it would soon be time to slow the pace of their bond buying "somewhat", though others advised patience.
Bullion prices fluctuated after the minutes were released, before succumbing to pressure from a rising dollar and US bond yields to end Wednesday lower. They have since steadied, however, as physical bullion buyers stepped in, analysts said.
Spot gold was flat at $1,365.56 an ounce at 1033 GMT, while US gold futures for December delivery were down $4.30 an ounce at $1,365.80.
"You would expect that after the minutes, the gold price would be slightly lower. But this is not what is happening at the moment," Karim Cherif, an analyst at Credit Suisse, said.
"What is interesting in gold prices right now is actually what is happening on the physical side. There is still substantial buying in the physical market."
The dollar was up 0.5 percent against a basket of currencies after the news of the Fed minutes, while the US 10-year Treasury yields set a fresh two-year high of 2.936 percent.
In June, Fed Chairman Ben Bernanke said the bank expected to trim stimulus later this year and to halt it by mid-2014.
Expectations that the Fed's quantitative easing policy - which helps support gold by maintaining pressure on interest rates while stoking fears over inflation - will be reined in has helped knock gold prices down by nearly a fifth this year.
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