Gold hovers near mid-June highs after Fed minutes

Jan 4 (Reuters) – Gold held near seven-month highs reached on Wednesday after the minutes of the Federal Reserve’s last meeting showed all its policymakers remained committed to fighting inflation but agreed on the need to slow rate hikes in 2023.

Spot gold rose 0.7% to USD 1,851.41 per ounce by 2:48 p.m. ET (1948 GMT), having risen as much as 1.4% earlier to its highest price since June 13.

US gold futures settled up 0.7% at USD 1,859.

Officials at the Federal Reserve’s Dec. 13-14 policy meeting acknowledged they had made “significant progress” over the past year in raising rates enough to bring inflation down, the minutes showed.

“Gold is holding remarkably steady despite Fed minutes that state clearly that rates will continue to rise and there would be no rate cuts in 2023 contrary to what the market has priced,” said Tai Wong, a senior trader at Heraeus Precious Metals in New York.

The dollar index was down 0.2%, making gold less expensive for overseas investors, while benchmark 10-year yields were slightly higher for the day.

Higher rates tend to weigh on non-yielding gold.

The minutes indicated that officials “emphasized the need to retain flexibility and optionality when moving policy to a more restrictive stance,” with a scale back to quarter-percentage-point increases as of the Jan. 31-Feb. 1 meeting possible, but open to an even higher “terminal” rate if inflation persists.

Fed fund futures kept bets that the central bank would raise rates another half of a percentage point in coming months before pausing just shy of 5%.

Gold prices could, however, ease if recent aggressive buying in Asia and Europe fades, Wong added, while expecting that gold could move between USD 1,800-USD 1,900 in the short term.

Silver fell 1% to USD 23.74 per ounce, platinum was down 0.6%, to USD 1,077.03, while palladium jumped 5.4% to USD 1,802.13.

(Reporting by Seher Dareen in Bengaluru; Editing by Paul Simao and Shailesh Kuber)