Gold Advances Amid Speculation Fed Will Hold Off Raising Rates

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Gold rose from a one-week low as the dollar weakened on speculation U.S. policy makers will hold off raising borrowing costs.

The metal pared its biggest weekly loss since April as mixed economic data prompted investors to push back estimates for the first increase to U.S. interest rates. Higher borrowing costs reduce the allure of gold, which generally only provides returns through price gains. Federal Reserve Chair Janet Yellen will speak on the economy later Friday.

“Yellen’s comments later today will be important for gold, as there is uncertainty over the timing of the first rate hike,” Jens Naervig Pedersen, an analyst at Danske Bank A/S in Copenhagen, said by e-mail. “If Yellen’s comments push back expectations of the first Fed hike, it may lend further support to the gold price.”

Gold for June delivery gained 0.6 percent to $1,211.30 an ounce by 7:59 a.m. on the Comex in New York. Prices fell 1.1 percent this week and touched the lowest since May 13 on Thursday. Bullion for immediate delivery rose 0.5 percent to $1,210.88, according to Bloomberg generic pricing.

The metal advanced to a three-month high on Monday, before retreating on signs of an improving U.S. housing market. U.S. data also showed jobless claims fell to a 15-year low, while manufacturing remained tepid. Minutes of the Fed’s last meeting showed many officials expected June would probably be too soon to boost borrowing costs.

Holdings in gold-backed exchange-traded products rose for the first time this week, according to data compiled by Bloomberg. Assets increased 1 metric ton to 1,604.1 tons, rebounding from the lowest since January.

Silver for July delivery added 0.7 percent to $17.25 an ounce, trimming the first weekly drop in four.

Platinum for July delivery added 0.4 percent to $1,157 an ounce. Palladium for June lost 0.3 percent to $773.50 an ounce.

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