BLBG: Gold Climbs to 3-Month High as Silver Gains on Fed Speculation
Gold climbed to a three-month high and silver rallied for a fifth day on speculation that weaker economic prospects in the U.S. mean the Federal Reserve may delay increasing interest rates.
Interest rates should be held near zero until early 2016 because inflation is still too far below the bank’s goal, Charles Evans, Fed Bank of Chicago President, said Monday in Stockholm, according to prepared remarks. The Fed will release on Wednesday the minutes of its latest meeting. Data last week showed U.S. consumer sentiment plunged the most in two years and factory production stalled in April.
“Disappointing data mean that the Fed will probably wait longer before raising interest rates,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail.
Gold for immediate delivery rose 0.5 percent to $1,230.40 an ounce at 11:11 a.m. in London, Bloomberg generic pricing shows. The price earlier reached $1,232.44, the highest since Feb. 17. The metal for June delivery climbed as much as 0.5 percent to $1,232 on the Comex in New York.
Speculators’ net-long position jumped 14 percent to 36,150 futures and options as of May 12, U.S. Commodity Futures Trading Commission data showed. That was the third advance in four weeks and the biggest gain since April 7.
The Fed has said it will raise its benchmark federal funds rate -- which has been near zero since December 2008 -- when it sees further labor-market improvement and is “reasonably confident” inflation will rise back to its 2 percent goal over time. Most economists in a Bloomberg survey late last month predicted the central bank will start tightening in September.
Record-low rates increase gold’s appeal because the metal doesn’t pay interest, unlike competing assets such as new bonds. The Fed is scheduled to publish the minutes of its April 28-29 meeting on May 20.
Silver for immediate delivery rose as much as 1.6 percent to $17.7815 an ounce, the highest since Jan. 29, before paring gains to $17.7278. Palladium fell 0.2 percent to $792.30 an ounce, while platinum was little changed at $1,168.05 an ounce.
