Gold Climbs to Five-Week High on U.S. Rate Outlook

Gold futures rose to a five-week high as traders pushed back estimates for an increase in U.S. interest rates by the Federal Reserve.

Rate futures indicated the odds of a U.S. increase at about 46.2 percent by October 2015, down from 55 percent a week earlier. In September, Switzerland exporter 172.6 metric tons of gold, the most in seven months, customs data showed. That “ties in well with the pick-up in physical demand,” UBS AG said in a report.

Gold advanced in the past two weeks after U.S. policy makers cited slowing foreign economies as a risk to American prospects. St. Louis Fed President James Bullard said last week the Fed should consider delaying plans to end bond purchases. Officials are scheduled to meet on Oct. 28-29.

“There is a growing consensus among investors that the Fed will continue with the low-interest rate policy,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Also, physical demand is expected to support prices.”

Gold futures for December delivery rose 0.6 percent to settle at $1,251.70 an ounce at 1:40 p.m. on the Comex in New York. Earlier, the price reached $1,255.60, the highest for a most-active contract since Sept. 10. Trading was 27 percent above the average for the past 100 days for this time, according to data compiled by Bloomberg.

“A more dovish Fed view would be interpreted as gold friendly,” James Steel, an analyst at HSBC Securities (USA) Inc., said in a report. “The prospect for a weaker dollar near term may provide support for bullion.”

Higher Rates

On Oct. 6, gold slumped to $1,183.30, the lowest this year, as gains in the U.S. economy supported the case for higher borrowing rates.

The dollar rose 0.2 percent against a basket of 10 currencies today after touching the lowest in almost a week. Yesterday, holdings in exchange-traded products backed by gold fell 0.5 percent to a five-year low, according to Bloomberg data.

Silver futures for December delivery rose 1.1 percent to $17.549 an ounce, the biggest gain since Oct. 9.

On the New York Mercantile Exchange, platinum futures for January delivery advanced 1.2 percent to $1,283 an ounce, the biggest gain since Oct. 6.

Palladium futures for December delivery rose 1.8 percent to $776 an ounce, capping a third straight increase.

Before it's here, it's on the Bloomberg Terminal.