Gold extends gains on prospects of Fed rates

Gold prices rose in European trade on Thursday for the third session in a row amid support from the dollar against a basket of major rivals, following weak US data and the release of Fed's minutes. 

It's clear that Fed members are preparing for a slower pace of rate hikes, paving the way for a 0.5% rate hike in December. 

Gold Prices Today

Gold prices rose 0.5% to $1,758 an ounce, after rising 0.5% yesterday, the second profit in a row, moving away from two-week lows at $1,723 an ounce. 

The Dollar

The dollar index fell 0.4% on Thursday for the third straight session, moving towards three-month lows at 105.3 against a basket of major rivals. 

Weak Data

Recent US data showed industrial activities slowed down sharply for the first time in 2-1/5 years as increased interest rates hampered new orders. 

The data overall showed a decline in services and industrial activities in November for the fifth month in a row, a sign of recession. 

The Fed

Fed's minutes yesterday showed US policymakers are content about the slowdown in inflation, and are moving toward smaller rate hikes.

Fed Rates

Chances of a 0.5% rate hike rose from 75% to 85%, while chances of 75% rate hike fell from 25% to 15%.

The SPDR 

Gold holdings at the SPDR Gold Trust remained flat yesterday at 906.93 tones, the highest since November 14.