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Gold gains in Asia as Fed views on rates mulled

Investing.com -

Investing.com - Gold gained in Asia on Thursday as investors parsed the latest Fed minutes for the pace of expected rate hikes and a weaker dollar supported demand.

Some saw the Fed minutes as a bit less hawkish than expected and as uncertainty swirls around President Donald Trump's plans to cut taxes and boost spending as policy makers said the outlook had changed little since January with further strengthening of the labor market and progress towards the inflation target and that rate hikes are likely ahead in line with a forecast for three this year.

But members were split over whether stronger inflation warranted faster hikes now or a more gradual pace given the persistence of low inflation in the past.

Later on Thursday, markets will keep close tabs on comments from a summit meeting of Trump and Chinese President Xi Junping in Florida. In China, the Caixin services PMI for March came in a six-month low of 52.2, below expectations.

Gold for April delivery on the Comex division of the New York Mercantile Exchange rose 0.70% to $1,257.25 a troy ounce. Copper futures on the Comex dropped 0.34% to $2.668 a pound.

Overnight, gold prices eased from one-month highs on Wednesday, pressured by a surge in the dollar, after the release of bullish U.S. private sector job growth.

Gold futures struggled to hold onto gains before turning negative, after ADP and Moody's Analytics said U.S. private employers added 263,000 jobs for the month. That was well above economists' expectations of 187,000. The stronger than expected private payrolls report raised expectations for a bullish Labor Department Nonfarm payrolls report expected to be released on Friday.

Meanwhile, a slowdown in the services sector capped selling pressure in the yellow metal, after a report from the Institute for Supply Management showed that non-manufacturing activity slowed more than expected to 55.2 from 57.6 in February.

Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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