Gold Rises Most in a Week as Equities Drop Boosts Haven Demand

  • Expectations of U.S. rate increase pushed back as stocks slide
  • `Gold looks like a nice place to park some money:' RJO Futures

Gold gained the most in a week as equities fell amid mounting global economic concerns, pushing back prospects for a U.S. interest-rate increase.

Stocks slid as investors turned cautious after worse-than-expected economic data in the U.S. and Germany this week. The global recovery is facing growing risks, IMF Managing Director Christine Lagarde said Tuesday, a week after Federal Reserve Chair Janet Yellen said caution was warranted in tightening monetary policy. Lower rates are a boon for gold, which becomes more competitive against interest-bearing assets.

Gold snapped two days of losses as traders push back expectations for when the Fed will raise U.S. interest rates. Odds that the central bank will make a move in December are at 51 percent, down from 64 percent a week ago. Bullion rose 17 percent last quarter after China’s economy grew at the slowest pace in a generation and volatility in financial markets increased, boosting demand for haven assets. 

“Investors are taking off riskier assets in the S&P 500 and other equities, and looking to come back into safety like gold,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Gold looks like a nice place to park some money.”

Gold futures for June delivery gained 0.8 percent to settle at $1,229.60 an ounce at 1:43 p.m. on the Comex in New York. The metal fell 1.3 percent in the previous two sessions.

The world outlook is clouded by “weak growth, no new jobs, no high inflation, still high debt -- all those things that should be low and that are high,” the International Monetary Fund’s Lagarde said in an interview in Frankfurt on Tuesday with Bloomberg Television.

In ETFs and other metals:

  • Holdings in exchange-traded funds backed by gold fell 1.2 metric tons to 1,763.2 tons on Monday, according to data compiled by Bloomberg.

  • Silver futures for May delivery gained 1.2 percent to $15.116 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum futures gained, while palladium dropped.
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