Gold Drops As Policy Minutes Confirm Fed's Tightening Path

Gold prices fell for a second straight session on Thursday, pressured after the minutes of the U.S. Federal Reserve's last policy meeting showed officials in support of further interest rate increases in June and July.

Gold as a non-interest-paying asset could see demand take a hit from higher rates.

Spot gold slipped 0.4% to $1,844.90 per ounce by 1215 GMT. U.S. gold futures eased 0.1% to $1,844.20.

Minutes of the Fed's May 3-4 policy meeting released on Wednesday showed all participants backing a half-percentage-point rate increase to combat inflation, although that was not a surprise to the market.

"We're in the post-Fed minutes phase and no great surprises in there," independent analyst Ross Norman said.

"Gold seems to falter when it hits anything like a technical resistance and then you get long liquidation and profit taking. So this is the key issue for gold at the moment."

Bullion is on track for its second consecutive monthly decline after prices hit a 3-1/2 month low earlier this month on a rallying dollar. Gold prices are up more than 3% since as the greenback backtracked.

"The selling that pushed the precious metal to a three-month low last week has abated, with exchange-traded funds now seeing inflows," ANZ analysts wrote in a note. [GOL/ETF]

The U.S. dollar held near one-month lows, while the U.S. 10-year Treasury yield fell to its lowest level since April. [USD/] {US/]

"The headwinds are a little less than they were... although it's a gold friendly environment, gold seems unable to get momentum behind it," Norman said.

In other metals, spot silver slid 0.6% to $21.83 per ounce, platinum fell 0.7% to $937.53 and palladium was down 0.2% at $2,001.41.