The Federal Reserve had been expected to raise the benchmark lending rate a third time this year, but the minutes of the July 25-26 meeting showed policymakers remained befuddled by weak inflation that has persisted despite historically low unemployment.
Analysts at Commerzbank said the metal was sent higher in late trade on Wednesday as the dollar suffered after Trump said he'd dissolve two advisory councils following mounting pressure from high-profile CEOs.
In essence, the U.S. Dollar and gold mirrored each other with the dollar falling from its session high and gold rallying from its session low.
The Euro had briefly dipped back below the 1.17 mark against the US Dollar prior to the release of the FOMC minutes on Wednesday after sources claimed that President of the European Central bank Mario Draghi would not use his Jackson Hole speech to announce any new policy changes.
United States stocks finished higher on Wednesday after Federal Reserve policymakers hinted at a slower pace to future interest rate hikes and retailers gained following a solid earnings report by Target. Both the Euro and the Japanese Yen are the highest weighted currencies in the dollar index. The Australian dollar decreased to 0.7907 US dollar from 0.7917 USA dollar. Mainland markets were also positive: The Shanghai Composite rose 0.44% and the Shenzhen Composite was higher by 0.13%. If the bulls continue to dominate the market and successfully break through 1288/6, then look for further upside with 1292 and 1296/5 as targets.
In other news, the New York Fed's Empire State manufacturing index surge 15 points to 25.2, its highest in almost three years.
Dollar Drops After Fed Minutes Released
The aussie and kiwi gained against the greenback, rising from their one-month lows.
Housing starts dropped 4.8% to a seasonally adjusted annual rate of 1.16 million units, the Commerce Department said on Wednesday.
Inflation remains a concern for Federal Reserve officials, as measures of inflation are now running well below the central bank's current target.
"The North Korea missile fears seems to be abating for now and if the recent bunch of strong US data translates into higher inflation, then markets will start pricing more interest rate increases from the Fed in the coming months", said Ulrich Leuchtmann, an FX strategist at Commerzbank in Frankfurt. For the 12 months ended June 30, the most recent data available, the Fed's preferred inflation measure was 1.4%. However, recent hawkish comments by New York Fed chief William Dudley advocating for another rate hike this year and strong retail sales data on Tuesday have upped the odds.
The dollar and bond yields fell after the minutes were released but have recouped some losses.