Gold advanced to the highest in a month as traders scaled back bets on a U.S. interest-rate increase in September after Federal Reserve officials said they needed more evidence that the economy is strengthening.
Fed officials signaled concern over low inflation and want to see the labor market improve further, according to minutes released Wednesday of the central bank’s July meeting. Gold reached a five-year low last month on concern policy makers would raise rates as early as September, curbing the meal’s appeal because it doesn’t pay interest.
Traders see the likelihood of a rate rise next month at 34 percent, down from 48 percent on Tuesday, data compiled by Bloomberg show. Gold is heading for the biggest monthly gain since January as concern about currency devaluations from China to Kazakhstan boosted demand for a haven. Investors on Wednesday bought the most bullion through physical-backed funds in a week.
“Expectations of a September rate rise are now fading and the focus is shifting to December, to the benefit of gold,” Tom Kendall, a precious metals strategist at ICBC Standard Bank Plc, said by phone from London.
Gold futures for December delivery rose 2.2 percent to settle at $1,153.20 an ounce at 1:42 p.m.on the Comex in New York. Prices rose to $1,153.70, the highest for a most-active contract since July 15.
Most Fed officials in July “judged that the conditions for policy firming had not yet been achieved,’ the minutes showed. Holdings in bullion-backed exchange-traded products rose 3.4 metric tons to 1,514.6 tons Wednesday, data compiled by Bloomberg show. They’re still near the lowest since 2009.
‘‘Gold is finding support from the statement since people thought the tone was dovish,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview.
Silver futures for December delivery gained 2.2 percent to $15.562 an ounce on the Comex. On the New York Mercantile exchange, platinum and palladium rose.