Gold advanced the most in a week after Federal Reserve officials said they need more evidence of strength in the economy and a pickup in inflation, reducing wagers that policy makers will soon raise U.S. interest rates.
Fed officials said they want more indications that the labor market is healing and that inflation is moving toward their goal, according to minutes of last month’s Fed meeting released Wednesday. The prospect of higher rates makes gold unattractive because the metal doesn’t pay interest.
Bullion on Friday capped the biggest weekly gain since mid-June after China unexpectedly devalued its currency, shaking up markets and boosting the appeal of haven assets. Global stocks fell Wednesday amid global growth concerns, while U.S. data showing consumer prices rose at a slower pace in July cast doubt on how quickly inflation will return to the Fed’s goal.
“It looks as if September is not a done deal, and gold is definitely getting a boost from it,” Mike Meyer, a vice president at EverBank Wealth Management in St. Louis, said in a telephone interview. “Also, inflation is so tame, and with the China rout issues it seems the hike will come in December rather than in September or October.”
Gold for immediate delivery rose 1.1 percent to $1,130.14 an ounce at 3:06 p.m. in New York, according to Bloomberg generic pricing. That’s the biggest advance since Aug. 12. Gold futures for December delivery jumped 1 percent to settle at $1,127.90 before the Fed announcement.
On Wednesday, traders were pricing in a 36 percent probability that the Fed will raises rates at its September meeting, compared with 54 percent on Aug. 7. The Fed’s benchmark rate has been near zero since 2008.
Investors sold holdings in exchange-traded products backed by gold, with total assets falling to 1,511.3 metric tons. That’s within 1 percent of the lowest since 2009, according to data compiled by Bloomberg as of Tuesday.
Silver futures for December delivery gained 2.6 percent to $15.222 an ounce on the Comex. Platinum and palladium advanced on the New York Mercantile Exchange.