* Gold reaches highest since early July at $1,168.80/oz
* Dollar at 3-week low after Fed minutes
* Hedge fund, money managers lift bullish bets to 4-mth high
* Palladium falls 2.6 percent, below 200-day moving average
* GRAPHIC-2015 asset returns: http://link.reuters.com/dub25t
(Updates prices; adds comment, second byline, NEW YORK
dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, Oct 12 (Reuters) - Gold rose to its highest
level since early July on Monday as expectations that the
Federal Reserve will postpone an expected U.S. interest rate
hike beyond the end of the year pressured the dollar to
three-week lows against a currency basket.
The dollar index was down 0.1 percent on the day, stung by
doubts that U.S. rates will rise this year. FRX/ MKTS/GLOB
Spot gold XAU= reached a peak of $1,169.00 an ounce and
was up 0.6 percent at $1,163.96 an ounce at 1401 GMT, while U.S.
gold futures GCv1 for December delivery settled up $8.60 an
ounce at $1,164.50.
Bets that U.S. rates would rise this year, increasing the
opportunity cost of holding gold while lifting the dollar,
pushed gold prices to 5-1/2 year lows in July.
However, mixed U.S. economic data and fears that a broader
global economic slowdown would affect U.S. growth have since
dampened those expectations.
"The idea in the market that the Fed will lift interest
rates this year is out of the market," LBBW analyst Thorsten
Proettel said. "People aren't expecting an interest rate hike
this year, with the bad jobs data from the United States, and
the problems in China."
On Monday, however, two Fed policymakers whose views are
often at odds both suggested they could well support an interest
rate hike in December, as long as the economic data does not
disappoint and that rate hikes, once begun, are gradual.
urn:newsml:reuters.com:*:nL1N12C0YA
Hedge funds and money managers raised their bullish bets in
COMEX gold and silver to four-month highs in the week ended Oct.
6. urn:newsml:reuters.com:*:nL1N1291V1
"From the currency side and also from the positioning side,
the gold price is getting some support," said Julius Baer
analyst Carsten Menke. "The technical picture is improving, so
that might lure some more short-term bullish positioning back
into the market."
In South Africa, the Association of Mineworkers and
Construction Union voted to strike at three operations.
urn:newsml:reuters.com:*:nL8N12B0MU
Palladium prices bucked the day's trend higher and fell as
much as 2.6 percent to $689 an ounce, falling from Friday's
four-month high. Pressure came from profit-taking, producer
selling and short-term technical weakness after failing at the
200-day moving average, said Dan Izzo, vice-president, Global
Marketing Strategy Group for brokerage RJO'Brien in New York.
"It has been overbought for a couple weeks now, ever since
the palladium and platinum move from the Volkswagen (DE:VOWG) fallout,"
Izzo said.
Silver XAG= was up 0.1 percent at $15.84 an ounce, while
platinum XPT= was up 1.3 percent at $991.50 an ounce.