Gold futures rose for the fourth straight session after Federal Reserve Chair Janet Yellen affirmed U.S. borrowing costs will remain low, increasing demand for the precious metal as an alternative investment.
There is no need to change current Fed policy, Yellen said today at the International Monetary Fund in Washington. The central bank has kept its benchmark lending rate near zero percent since December 2008 and is buying longer-term Treasury debt and mortgage-backed securities.
In the past two days, holdings in the biggest exchange-traded product backed by gold rose the most since November 2011. On June 19, futures surged the most in nine months after the Fed said rates will stay low for a “considerable time,” raising inflation concerns. Today, silver climbed to a 15-week high, and palladium posted the longest rally in 33 months.
Yellen “made it clear that is no need to raise rates or adjust policies,” Tom Power, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Some people are seeing the need for an inflation hedge in a low-rate regime.”
Gold futures for August delivery rose 0.3 percent to settle at $1,330.90 an ounce at 1:47 p.m. on the Comex in New York. Yesterday, the price reached $1,334.90, the highest for a most-active contract since March 24. The metal gained for the 10th time in 11 sessions.
Earlier, futures fell as much 0.3 percent after figures from the ADP Research Institute showed employment at companies in the U.S. climbed in June by the most since November 2012. The Labor Department is scheduled to report monthly job statistics tomorrow.
This year, gold has climbed 11 percent as political turmoil in Ukraine and Iraq boosted haven demand and amid concern that the economic recovery in the U.S. was faltering.
The metal surged 70 percent from December 2008 to June 2011 as the central bank bought debt to bolster the economy, increasing concern that inflation may rise.
Silver futures for September delivery climbed 0.9 percent to $21.302 an ounce on the Comex. The price reached $21.335, the highest since March 17.
Palladium futures for September delivery rose 0.3 percent to $857.40 an ounce on the New York Mercantile Exchange. The price climbed for the eighth straight session, the longest rally since September 2012. Russia is the top producer, followed by South Africa.
Platinum futures for October delivery fell 0.2 percent to $1,511.50 an ounce. Earlier, the price reached $1,523, the highest since Sept. 4, amid signs of increasing demand from car companies for the metal used in pollution-control devices.
Automobile sales in the U.S. headed for the biggest year since 2007. Holdings in exchange-traded funds backed by platinum have climbed to a record, and a supply deficit will expand to an all-time high, according to Johnson Matthey Plc, which makes a third of the world’s catalytic converters.
A five-month strike by miners crippled output in South Africa, the world’s top producer. The walkout by 70,000 employees in a pay dispute ended June 23.