Gold Climbs to Six-Week High as Fed Seen Delaying Rate Increase

  • Prices gain as Fed minutes show officials waiting on more data
  • Platinum advances most since December, extending weekly climb

Gold advanced to a six-week high as minutes of the Federal Reserve’s latest meeting increased speculation that the central bank will hold off raising interest rates until next year.

While Fed officials noted that hiring and consumer spending continued to improve, policy makers “decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated,’’ minutes released Thursday showed. The odds of a rate increase in 2015 have dropped in the past month and traders and analysts surveyed by Bloomberg are the most bullish on gold in three weeks.

Signs that U.S. growth may be slowing have helped gold rebound almost 8 percent from a five-year low set in July, even as Fed officials feel pretty good about the U.S. economy and Chair Janet Yellen has said the central bank still expects to raise rates this year. Higher borrowing costs curb the appeal of bullion, which doesn’t pay interest or give returns like other assets such as bonds and equities.

“With those statements from the Fed, we believe there’s less of a chance that they will raise rates this year,” David Meger, the director of metals trading at High Ridge Futures in Chicago, said in a telephone interview. “That’s why we’re seeing more of a risk-on trade across the board, including precious metals. Generally, higher interest rates are not a good environment for gold.”

Bullion Prices

Gold futures for December delivery advanced 1 percent to settle at $1,155.90 an ounce at 1:47 p.m. on the Comex in New York, after touching $1,159.30, the highest since Aug. 24. Prices are up 1.7 percent this week.

Traders put the probability of a rate increase in December at 39 percent, down from 57 percent a month ago, according to Fed-fund futures data compiled by Bloomberg. The odds rise to 62 percent for a move in March.

“The Fed comments definitely helped to push gold higher,” Ross Norman, chief executive officer of Sharps Pixley, a London-based precious-metals dealer, said by phone. “There is a palpable shift in the mood in the gold market. If we lift another $20, we may make significant headway.”

Platinum futures climbed for a sixth day, the longest rally since April 2014. Palladium and silver also advanced.

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