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By Bloomberg

Gold rose for the first time in four days on signs that the U.S. Federal Reserve may hold off on raising interest rates. Funds backed by the metal saw the biggest increase in assets since January.

William C. Dudley said in an unscheduled statement Wednesday that the case for raising rates in September is increasingly in doubt after recent turmoil in global stock markets stemming from fears about weakened Chinese growth. Low interest rates make precious metals, which don’t provide investors with a yield, more competitive with stocks and bonds.

Gold added 0.1 percent to $1,126.78 an ounce by 12:54 p.m. in London. Silver, platinum and palladium for immediate delivery climbed at least 0.9 percent, according to Bloomberg generic pricing. Precious metals tumbled earlier this week, with palladium and silver reaching the lowest in at least five years.

“The theme is generally one of a little bit of a calm returning and volatility diminishing a touch,” Tom Kendall, head of precious metals strategy at ICBS Standard Bank Plc, said by phone Thursday. “Some of the selling, at least in the short term assets, has been overdone.”

Precious metals slumped earlier this week on concern about slowing demand as Citigroup Inc. cut estimates for gold, silver and other commodities, and investors pulled money from exchange- traded products backed by bullion for the first time in five days. Gold is still up 2.8 percent in August, set for the first monthly advance since May.

U.S. Rates

“Dudley’s comments only serve to confirm how far away we are from anything approaching rate normalization,” Jordan Eliseo, chief economist at Australian Bullion Co. in Sydney, said by e-mail. “Over the medium term, that will be gold- bullish.”

Gold futures for December increased 0.1 percent to $1,125.90 an ounce on the Comex in New York. Holdings in bullion-backed exchange-traded funds rose 7.9 metric tons to 1,527.6 tons as of Wednesday, data compiled by Bloomberg show.

Silver for immediate delivery rose 0.9 percent to $14.2515 an ounce. Palladium climbed 1.2 percent to $539.40 an ounce. Platinum added 0.9 percent to $991.38 an ounce.