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By Bloomberg

Gold rallied to the highest level in a month as bets eased on a U.S. interest rate increase in September after Federal Reserve officials said they needed more evidence of a strengthening economy, boosting the metal’s allure.

Gold for immediate delivery climbed as much as 0.5 percent to $1,139.59 an ounce, the highest level since July 17, and traded at $1,138.26 at 12:07 p.m. in Singapore after surging 1.5 percent on Wednesday, according to Bloomberg generic pricing. That was the biggest increase since May 13.

Fed officials said they want more indications that the labor market is healing and that inflation is moving toward their goal, according to minutes of last month’s Fed meeting released Wednesday. The prospect of higher rates makes gold unattractive because the metal doesn’t pay interest.

“The gold market is being viewed as very cheap,” Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “We’ve got physical demand extremely high. The physical demand that we’ve seen and the premiums in gold moving higher are starting to make a few heads turn in terms of gold as an investment.”

Bullion capped the first weekly gain since mid-June last week after China unexpectedly devalued its currency, shaking up markets and boosting the appeal of haven assets. Global stocks fell Wednesday amid growth concerns, while U.S. data showing consumer prices rose at a slower pace in July cast doubt on how quickly inflation will return to the Fed’s goal.

“Gold is getting supported,” Dominic Schnider, head of commodities and Asia-Pacific foreign exchange at UBS Group AG’s wealth-management unit in Hong Kong, said by phone. “With the uncertainty that the Fed might not hike, you get that lift. We are of the opinion that the Fed will hike, so we see this bounce as very short-lived and it’s going to come under pressure again.”

Gold futures for December delivery climbed as much as 1 percent to $1,138.90 an ounce, the highest since July 17, extending Wednesday’s 1 percent advance. Bullion of 99.99 percent purity advanced 1.4 percent to 234.93 yuan a gram ($1,141.81 an ounce) on the Shanghai Gold Exchange, up for a fourth day, and heading for the highest close since June 30.

Traders are pricing in a 38 percent probability that the Fed will raises rates at its September meeting, compared with 54 percent on Aug. 7. The Fed’s benchmark rate has been near zero since 2008.

Holdings in bullion-backed exchange-traded products expanded 0.2 percent on Wednesday, but were still near the lowest since 2009, according to data compiled by Bloomberg.

Silver for immediate delivery added 0.4 percent to $15.3857 an ounce after surging 3 percent on Wednesday. Platinum climbed 0.8 percent to $1,022.53 an ounce, after a 2 percent jump on Aug. 19. Palladium rose 0.7 percent to $618.50 an ounce after settling 2.7 percent.