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BookmarkDollar dips from 3-year high against basket ofcurrencies
* China’s June trade data disappoints, outlook grim
* Coming up: Fed June meeting minutes at 1800 GMT (Updates prices, adds comment)
By Clara Denina
LONDON, July 10 (Reuters) – Gold rose for a third consecutive session on Wednesday, as the dollar fell ahead of minutes from last month’s Federal Reserve meeting, which traders believe will give clues on whether the U.S. central bank will soon start to reduce monetary stimulus.
Bullion has lost nearly 10 percent since Fed Chairman Ben Bernanke said in June the U.S. economy was recovering strongly enough to slow the pace of the $85 billion of monthly bond purchases.
Some market players said gold may see support if the Fed decides to taper in December or later, instead of current expectations of a September wind down, although many think there will be no surprises.
“It is a very important meeting, the market is focusing on it very much and since the outcome of it isn’t very clear, I wouldn’t be surprised to see gold benefiting if the tone of the minutes is not as hawkish as it has been in the past,” Commerzbank analyst Eugen Weinberg said.
Spot gold gained 0.5 percent to $1,255.01 an ounce by 1403 GMT. It hit a one-week high of $1,260.01 on Tuesday, helped by higher-than-expected Chinese inflation data and physical demand and is on track for its best weekly gains since the end of April. Comex gold futures for August rose $8.00 to $1,253.80.
The dollar fell 0.4 percent against a basket of currencies, while benchmark U.S. 10-year Treasury yields eased to around 2.6 percent.
As gold pays no interest, the fall in returns from U.S. bonds is seen as positive for the metal.
The Fed releases minutes from its June policy meeting at 1800 GMT and Bernanke is due to speak at a conference later in the day.
Several Fed officials have tried to reassure global markets after Bernanke’s comments in June caused panic. The stimulus measures have also boosted liquidity overall and driven funds into commodities over the past few years.
“People understand that QE will be tapered, but I think where the focus now lies is what the Fed is thinking about interest rates and when the hiking will start and how quickly that hiking will occur,” Standard Bank analyst Marc Ground said.
Low interest rates are usually seen as encouraging investors to put money into the non-interest-bearing assets like gold.
CHINA DATA
Gold prices shrugged off initial weakness after disappointing Chinese trade data stoked fears of a slowdown in demand for commodities in the world’s second-biggest economy.
The world’s second-largest gold consumer China has been a big support for gold prices, which have lost a quarter of their value this year.
But physical demand was likely to ease as refineries prepare to shut for house-keeping during the summer, traders said.
Holdings in SPDR Gold Trust, the largest gold-backed exchange-traded funds (ETFs) declined a further 7.2 tonnes on Tuesday, adding to the previous session’s 15-tonne drop. The fund’s already on track for its biggest weekly outflow in seven weeks.
Silver was unchanged at $19.22 an ounce. Platinum rose 0.4 percent to $1,368.75 an ounce and palladium climbed to a three-week high of $713 an ounce.
