Gold heads for second weekly advance on outlook for U.S. rates
By Bloomberg
Gold traded below a five-week high, headed for the first back-to-back weekly increase since July, amid speculation signs of a global slowdown led by Europe may delay the onset of higher U.S. borrowing costs. Palladium rose.
Bullion for immediate delivery was at $1,239.49 an ounce at 2:34 p.m. in Singapore from $1,238.81 yesterday, according to Bloomberg generic pricing. The metal rose to $1,249.75 on Oct. 15, the highest since Sept. 11, and is up 1.3 percent this week.
A rout in global equities and commodities including crude oil and base metals has boosted haven demand as the Bloomberg Dollar Spot Index fell for a second week. The Federal Reserve should consider delaying the end of its bond-purchase program to halt a decline in inflation expectations, said St. Louis Fed Bank President James Bullard.
"Changing rate expectations is the key to dollar moves and therefore gold," said Mark To, head of research at Wing Fung Financial Group, a Hong Kong-based trader and refiner. "As the outlook for Europe worsens, investors are contemplating whether the Fed will have to postpone raising interest rates, which should benefit precious metals."
Reports this week showed U.S. retail sales dropped more than estimated in September, while factory output rebounded. Bullard said yesterday that U.S. economic fundamentals remain strong, and said recent financial-market turmoil was triggered by downgrades to the outlook for Europe. Germany this week cut its growth forecasts for this year and 2015.
SPDR Expands
Gold for December delivery traded at $1,239.70 an ounce on the Comex in New York from $1,241.20 yesterday. Futures climbed to $1,250.30 on Oct 15, the highest price Sept. 11. Assets in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, rose yesterday from the lowest since December 2008.
Fed policy makers are scheduled to next gather on Oct. 28-29 and have said they expect to end asset purchases after that meeting. The Fed has held its short-term interest-rate target at zero to 0.25 percent since December 2008.
Silver for immediate delivery was at $17.4079 an ounce from $17.392 yesterday, little changed this week. Spot platinum climbed 0.5 percent to $1,253.22 an ounce, trimming a weekly decline after dropping below gold yesterday. Palladium advanced 0.6 percent to $746.75 an ounce, paring a weekly loss.