Gold Rises for Second Day as Economic Woes Ease Fed Rate ConcernDebarati Roy and Eddie van der Walt
Gold rose a second day, extending a rebound from a three-month low, on speculation that economic risks from China and Greece will prompt the Federal Reserve to delay raising U.S. interest rates.
All but one member of the Federal Open Market Committee “indicated that they would need to see more evidence that economic growth was sufficiently strong” before raising rates, Fed minutes released Wednesday showed. Higher rates curb bullion’s appeal because it doesn’t pay interest or give returns like other assets such as bonds and equities.
Gold dropped in the past four quarters, the longest slump since 1997, on the prospect of higher rates. The minutes showed Fed concerns that turbulence overseas poses a risk for U.S. expansion. The International Monetary Fund on Thursday cut its forecast for global growth in 2015.
“The chances of the Fed raising rates this year are very dim, and that should support gold,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “The world has a lot of economic issues at the moment, and gold is getting some safe-haven bids.”
Gold for immediate delivery rose 0.2 percent to $1,160.73 an ounce at 1:47 p.m. in New York. Prices climbed 0.3 percent on Wednesday after touching $1,147.36, the lowest since March 18.
The IMF in cutting its forecast cited a weaker first quarter in the U.S. and warned that financial-market turmoil from China to Greece clouds the outlook. Chinese stocks have tumbled in recent weeks, and Greece is struggling to reach a deal with European creditors to stay in the euro area.
“The Fed is concerned about the developments in China and Greece, making interest-rate hikes in the near future unlikely,” Commerzbank AG analysts wrote in a report Thursday. “Gold finds itself slightly recovered.”
A government report showed Thursday showed that more Americans than forecast filed for unemployment benefits last week, representing a pause in the pace of labor-market improvement.
Gold futures for delivery in August declined 0.4 percent to settle at $1,159.20 on the Comex in New York.
Silver for immediate delivery gained 1.6 percent to $15.41 an ounce. Platinum and palladium fell.
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