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

By Sethuraman N R

(Reuters) - Gold rose for a fourth straight session on Thursday, buoyed by a weaker dollar after minutes from the U.S. Federal Reserve's July meeting showed several members were cautious on hiking interest rates soon.

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

Spot gold was up 0.4 percent at $1,353.06 an ounce at 0344 GMT.

U.S. gold climbed 0.7 percent to $1,358.70 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 U.S. 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, which measures the greenback against a basket of six major currencies last stood at 94.599, hovering near Tuesday's seven-week low of 94.426 and having lost over 1 percent 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 percent to 957.78 tonnes on Wednesday. [GOL/ETF]

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

Silver was up 1 percent at $19.86 an ounce on Thursday, after touching an over three-week low the day before.

Platinum rose 1.6 percent to $1,130.60, after hitting a new three-week low of $1,099.74 in the previous session.

Palladium was up 1 percent at $699.80.

(Reporting By Nallur Sethuraman in Bengaluru; Editing by Joseph Radford)