Gold Holds Rebound After Fed Signals No Rate Increase Next Month

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Gold held a rebound from the lowest price in a week after Federal Reserve minutes signaled officials are unlikely to raise U.S. interest rates at their next meeting.

Many Fed officials thought economic data available in June wouldn’t be robust enough to warrant raising rates for the first time since 2006, according to minutes of the April 28-29 session released on Wednesday. Higher borrowing costs cut the allure of gold, which generally only provides a return through price gains.

“Gold continues to follow the Fed, and at the moment it doesn’t look as if they’re going to tighten in June,” Bernard Dahdah, an analyst at Natixis SA, said by phone from London. “We now expect the Fed to hold back until September.”

Bullion for immediate delivery was little changed at $1,209.28 an ounce at 11:16 a.m. in London, according to Bloomberg generic pricing. It rose 0.2 percent on Wednesday after earlier falling to $1,203.43, the lowest since May 13. Gold for June delivery was unchanged at $1,208.70 on the Comex, where futures traded volume was 24 percent below the 100-day average for the time of day.

The minutes also confirmed that the Fed expects growth to pick up after stalling in the first quarter. The Federal Open Market Committee meets again June 16-17. The next signal of the central bank’s intentions will come on Friday, when Chair Janet Yellen gives a speech on the economic outlook in Providence, Rhode Island.

Holdings in exchange-traded products fell a third day on Wednesday to 1,603.1 metric tons, the lowest since January, according to data compiled by Bloomberg.

Silver for immediate delivery climbed 0.3 percent to $17.1792 an ounce. Platinum was little changed at $1,157.05 an ounce, while palladium advanced 0.2 percent to $779.58 an ounce.

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