Gold jumps on Fed rate path doubts as dollar flips down

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Gold prices rose over 1% on Friday as the dollar turned negative, with bullion getting additional support from reports of a potential debate amongst the U.S. Federal Reserve officials about the pace of rate hikes.

Spot gold rose 1% to $1,644.38 per ounce by 11:33 p.m. ET (1533 GMT). U.S. gold futures gained 0.7% to $1,648.70.

"The Wall Street Journal article which mentions the pace of rate hikes is being given a lot of share of mind for (market)participants," said Daniel Ghali, commodity strategist at TD Securities.

The WSJ reported that Fed officials are barreling toward another interest-rate rise of 0.75 percentage point in November, while some have begun signalling their desire to slow down the pace of increases soon.

Gold is sensitive to rising interest rates, as these increase the opportunity cost of holding non-yielding bullion.

Gold prices rebounded having slipped to their lowest since end-September earlier in the day.

With gold hitting a low, people came in and started buying it, said Michael Matousek, head trader at U.S. Global Investors.

The dollar index gave up earlier gains and slipped 0.3%, making gold a less expensive for overseas investors.

On the physical side, demand for gold in India picked up pace this week as some consumers bought into a retreat in domestic prices ahead of festivals.

"Indian demand for physical gold alone has been so strong that it's offset all the liquidations from physically backed ETFs… But with Diwali just a few short days away, we could see less retail interest and continued outflows from institutional investors, which should see prices subside from here," Ghali added.

Elsewhere, spot silver rose 1.3% to $18.91 per ounce, platinum was steady at $913.50, while palladium fell 3.4% to $1,988.90, earlier falling over 5%.