1st LD Writethru: Gold up sharply on likely rate hike delay

Gold futures on the COMEX division of the New York Mercantile Exchange rose sharply on Thursday as the minutes from the previous Federal Open Market Committee meeting indicated a delay in the expected rate increase.

The most active gold contract for December delivery rose 25.3 U.S. dollars, or 2.24 percent, to settle at 1,153.20 dollars per ounce.

Gold was given extensive support as the release of the Federal Open Market Committee minutes from the previous month's meeting adjusted expectations for an increase of the U.S. central bank's interest rate to later than September.

Expectations for a rate increase were originally in June, but because of bad unemployment data expectations were shifted to September. An increase in the Fed's interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

Gold was given additional support as the U.S. Dollar Index fell by 0.43 percent to 96.04 as of 18:15 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

Silver for September delivery rose 33.8 cents, or 2.23 percent, to close at 15.517 dollars per ounce. Platinum for October delivery added 21.8 dollars, or 2.15 percent, to close at 1,034.90 dollars per ounce. Endit