Silver, Gold Advance on Bets Fed Will Raise Rates at Slower Pace

  • Gold futures erase earlier declines in New York trading
  • Fed's Rosengren says rate increases face `downside risks'

Silver futures gained the most in four weeks amid speculation that the Federal Reserve may slow the pace of increases for U.S. interest rates, boosting the metal’s appeal as a store of value. Gold also gained.

Fed Bank of Boston President Eric Rosengren said the central bank’s projected forecast for tightening monetary policy faces “downside risks” as estimates for U.S. economic growth fall. The comments were in the text of a speech to the Greater Boston Chamber of Commerce. Higher rates reduce the appeal of silver and gold, which don’t pay interest or offer returns, unlike assets such as bonds or equities.

Silver last month touched the lowest in six years as the Fed raised interest rates for the first time since 2006. Investors have sought out precious metals this year as China’s slowing economy spurred global market turmoil.

Rosengren’s speech “suggests that the doves may only go along with one, perhaps two rate hikes before there’s a lot of push back, and that’s helping to put a floor in for gold and silver,” Tai Wong, director of commodity products trading at BMO Capital Markets in New York, said in a telephone interview.

Silver futures for March delivery gained 2.9 percent to settle at $14.156 an ounce at 1:49 p.m. on the Comex in New York. Prices are up 2.6 percent since the start of the year.

Gold Rallies

Gold futures for February delivery added 0.2 percent to $1,087.10 an ounce, erasing losses of as much as 0.5 percent.

While gold prices have declined this week, investors are still buying the metal through exchange-traded products. ETP holdings rose 4.9 metric tons to a six-week high of 1,482.7 tons as of Tuesday, data compiled by Bloomberg show. The assets rose for a fourth day, the longest stretch since October.

On the New York Mercantile Exchange, palladium futures for March delivery climbed 3.6 percent to $486.65 an ounce, while platinum futures for April delivery rose 1.5 percent to $851.30 an ounce.

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