Gold rises on weaker dollar as Fed minutes cool rate hike expectations

Gold rose for a fourth straight session on Thursday, buoyed by a weaker dollar after minutes from the US Federal Reserve's July meeting showed several members expressing caution over hiking interest rates soon.

The minutes showed that members of the Fed's rate-setting Federal Open Market Committee were generally upbeat about the US economy and labour market, but several said any slowdown in future hiring would argue against a near-term hike.

Spot gold was up 0.3 per cent at $1,351.94 an ounce at 0645 GMT.

US gold climbed 0.6 per cent to $1,357.20 an ounce.

"Most market participants are now expecting a December rate hike at the earliest. That means that people are on the side of buying gold," said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.

"Nobody would be willing to sell gold aggressively even if there is a hike in rates, with the US presidential elections in November creating uncertainty."

Spot gold is biased to rise above a neutral range of $1,337.22-$1,358.01 per ounce, and could climb into a range of $1,365-$1,373, according to Reuters technical analyst Wang Tao.

The dollar index, which measures the greenback against a basket of six major currencies, stood at 94.448, after plunging to as low as 94.385, the lowest in more than seven weeks. The index has lost over 1 per cent so far this week.

A stronger dollar discourages gold-buying by making the metal more expensive for holders of other currencies.

"There were mixed expectations on whether there would be one rate hike or two. Now, we think most likely it will be none," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.46 per cent to 957.78 tonnes on Wednesday.

CME on Wednesday lowered COMEX 100 Gold Futures (GC) maintenance margins for speculators by 10 per cent to $5,400 per contract from $6,000 for August and September 2016.

Silver was up 0.6 per cent at $19.78 an ounce on Thursday, after touching a more than three-week low the day before.

Platinum rose 1.1 per cent to $1,124.70, after hitting a new three-week low of $1,099.74 in the previous session, while palladium was up 0.9 per cent at $698.10.