Gold rose for a second day on Thursday after Federal Reserve officials hinted that US interest rates could rise more slowly than expected, while palladium was lifted to a fresh 16-year high by strong industrial metals markets. A cautious Dallas Fed President Robert Kaplan said on Thursday he would need to see evidence that prices will rise to a 2-percent target in the medium term to support another interest-rate hike.
Meanwhile, Kaplan's Minneapolis counterpart Neel Kashkari said he continues to see no urgency to raise interest rates. The minutes of the Fed's July 25-26 policy meeting showed some policymakers wished to halt further rate increases until it is clear the trend of soft inflation is transitory.
"Yesterday's FOMC minutes once again indicate that ether will be no rate increase until next year and the ECB today essentially came out and said the euro is too strong." said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York. Spot gold was up 0.4 percent at $1,286.44 an ounce by 3:21 p.m. EDT (1921 GMT) after rising nearly 1 percent the previous day.
US gold futures for December delivery gained 0.7 percent to settle at $1,292.40 an ounce. Analysts said US President Donald Trump's decision Wednesday to disband two high-profile business advisory councils also helped gold because it shook confidence in Trump's ability to enact economic stimulus, lowering expectations of rate rises.
Gold has also been supported by physical buying, with holdings in the largest gold-backed exchange-traded-fund, New York's SPDR Gold Trust, 275,663 ounces, or 1.1 percent, higher on Wednesday than Friday's levels. Technical resistance was at the June high of $1,296.30 with Fibonacci support at $1,261.30, said analysts at ScotiaMocatta. Palladium surged 1.1 percent to $923.8 an ounce after touching $930, the highest since February 2001. Silver fell 0.5 percent to $17 an ounce and platinum was down 0.6 percent at $970.55 an ounce.