Gold Advances as Fed Says Officials Will Monitor Global Impactby
Gold climbed after the Federal Reserve said policy makers will “closely monitor” how the global economy and markets impact the U.S. outlook.
Fed officials left interest rates unchanged and said they still expect to raise borrowing costs at a “gradual” pace, according to a statement Wednesday at the conclusion of a two-day meeting. Investors have expanded their holdings in funds backed by gold this month as traders pushed back expectations of when the Fed will next increase rates.
“There seems to be a collective sigh of relief that this statement wasn’t hawkish,” Tai Wong, the director of commodity products trading at BMO Capital Markets in New York, said in a telephone interview. “The gold rally has dodged this bullet, and it’s an opportunity to take it higher.”
Bullion is heading for the biggest monthly gain in a year. China’s economic slowdown sparked turmoil across global markets and lifted demand for gold as a haven. The tumult also increased speculation that the Fed will slow the pace of U.S. interest-rate increases, after tightening borrowing costs last year for the first time in almost a decade. Higher rates reduce the appeal of precious metals, which don’t pay interest or offer returns, unlike competing assets.
Bullion for immediate delivery added 0.7 percent to $1,127.42 an ounce at 2:59 p.m. in New York, according to Bloomberg generic pricing. Prices earlier dropped as much as 0.4 percent.
Investors bought gold through funds for a seventh day, the longest stretch in a year. Holdings in exchange-traded products backed by the metal rose 8.6 metric tons to 1,512.2 tons as of Tuesday, data compiled by Bloomberg show. That’s the highest since November.