• Gold squeezes higher to reach $1,678 after Fed's minutes.
• The US dollar loses ground as the Fed hints to moderate the hiking pace.

Gold futures spiked up to session highs at $1,677, with the US dollar turning lower as the minutes of September’s Fed meeting have been considered as tilted to the dovish side.

The yellow metal, however, has given away gains shortly afterward, with the US dollar retracing lost ground. XAU/USD is practically back at pre-Minutes levels at the time of writing.

Investors see hints of moderation in the Fed’s minutes

The Federal Reserve has shown its surprise at the pace of inflation and has confirmed that the officials maintain their commitment to continue hiking interest rates until the problem shows signs of resolving.

The market, however, has analyzed one comment as a potential sign of moderation on the monetary tightening cycle: “Several participants noted that (…) it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook.”

These comments have been taken as a hint that the bank might be considering smaller rate hikes in the next months. This has had a negative impact on the USD, which sent gold futures higher.

Technical levels to watch