Gold rises to near 2-week high as US rate hike fears ease

SINGAPORE: Gold climbed to its highest in nearly two weeks on Thursday as expectations of an early hike in US interest rates eased and the dollar lost traction after the release of minutes of the last Federal Reserve policy meeting.

Spot gold rose to $1,225.24 an ounce early on Thursday, before paring some gains to trade up 0.2 percent at $1,223.95 by 0310 GMT.

The fourth straight day of gains took gold further away from a 15-month low of $1,183.46 hit on Monday.

US gold futures jumped over 1.5 percent to $1,226.20, also close to a two-week peak, while silver futures rose about 2 percent.

"The market was on the short side and the current move is a squeeze not just in gold but all precious metals," said a bullion trader in Sydney.

"We might go a little higher from here, maybe up to $1,230-$1,240, but around those levels gold is a good sell. With equities still holding up, we would look for lower gold prices by year end," the trader said.

Asian shares rebounded on Thursday after US stocks soared overnight, with major indexes posting their biggest one-day jumps of 2014.

The boost came from the minutes of the Federal Reserve's Sept. 16-17 meeting, released on Wednesday. The minutes showed that Fed officials want to tie an interest-rate rise to US economic progress, but they are struggling with how to come to grips with the dual threats of a stronger dollar and a global slowdown.

That prompted investors to bet that the Fed is in no rush to tighten after years of monetary stimulus.

The US dollar, which has risen in the past 12 consecutive weeks, hit a near two-week low, further boosting gold's appeal.

Bullion investors had feared that strong US economic data would prompt the Fed to boost rates soon, a move that would dent demand for non-interest-bearing gold.

Despite the uptick in gold prices this week, sentiment remained bearish as gold remains close to the key $1,200-an-ounce level.

Holdings in SPDR Gold Trust, the world's top gold-backed exchange-traded fund and a good proxy for market sentiment, fell 5.38 tonnes to 762.09 tonnes on Wednesday - the lowest since December 2008.

"Despite the new interpretation of the minutes we still believe that the Fed's window to raise rates will be in the first half of 2015 and so do not see anything significantly changing in terms of the gold outlook," said INTL FCStone analyst Edward Meir.