Int'l gold highest since early May on Fed hopes

Gold rose to its highest level in more than three months on Thursday, after minutes from the latest U.S. Federal Reserve meeting showed the central bank could be willing to launch another round of bond buying soon.

Fundamentals

* Spot gold climbed to $1,656.46 an ounce, its highest since May 2, before easing slightly to $1,654.16.

* The U.S. gold futures contract for December delivery gained nearly 1 percent to $1,656.50.

* The Fed is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably, minutes from the central bank's latest meeting suggested.

* The question is whether the Fed will take into account recent data that shows improvement in the economy. The latest figures showed U.S. home resales rose in July, pointing to a slow recovery in the housing market.

* Chances that the Fed will launch a third round of money printing have risen slightly over the past month to 60 percent, according to a Reuters poll that also showed economists lowering economic growth expectations for this year and next.

* China must use all the tools available to it to manage monetary policy effectively, Zhou Xiaochuan, governor of the People's Bank of China, said on Wednesday.

* Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, had risen to a three-month high of 1,281.978 tonnes by August 22.

* Other precious metals hovered near multi-month highs hit in the previous session, and the readings of Relative Strength Index on silver, platinum and palladium all exceeded 70, seen as a sign that the underlying market is overbought.

Market news

* The S&P 500 erased earlier losses to close flat on Wednesday, while the dollar index dropped to a two-month low.