Gold Closes Higher as the Dollar Sinks and FOMC Meeting Minutes are Released

As promised, the minutes from last month’s FOMC meeting were released just after gold futures closed for the Thanksgiving holiday. Trading moderately higher throughout the evening in overseas trading, gold moved up sharply to trade to new highs on the day, just prior to the end of the trading day.

Just before 3 o’clock EST gold futures are still settling, and currently trading up $12 (+0.94) on the day at $1283.70. This settlement price is approximately one dollar off of today’s high of 1294.

Spot gold continues to trade and is currently fixed at $1293.70, which is a net gain of $13.70 on the day. On closer inspection we can see that today’s sharp rise in gold pricing was based predominantly on a weakening U.S. dollar. According to the Kitco Gold Index (KGX), $10.10 of today’s price advance is directly attributable to a weakening U.S. dollar, with the remaining $3.60 attributable to buyers bidding up the precious yellow metal. In total, spot gold gained 1.07% on the day.

The FOMC meeting minutes revealed that although the Federal Reserve funds rate remains unchanged, language is used describing the robust nature currently seen in the U.S. economy. Although the minutes did not specifically state that they would raise interest rates in December, the language they used was that “interest rates would have to be raised in the near term” based upon the current indication that the economy will continue to show strong and dynamic growth.

Fed members did state their concern about the current inflationary data which remains persistently weak, however they added that “Many participants thought that another increase in the target range for the federal funds rate was likely to be warranted in the near term.”

The fact that we are on the eve of the Thanksgiving holiday and a long weekend is expected to give traders and market participants a chance to react to this information when trading resumes.

Most importantly, we at the Gold Forecast want to wish all our followers a blessed and happy Thanksgiving for those that celebrate the holiday. For those in America and abroad, we offer our thanks and wish that you will be blessed with many things to be thankful for, both now and in the year ahead.

Wishing you as always, good trading,