Gold climbs to 3-month high, silver gains

London - Gold climbed to a three-month high and silver rallied for a fifth day on speculation that weaker economic prospects in the US 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 US 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% to $1 230.40 an ounce at 12:11, Bloomberg generic pricing shows. The price earlier reached $1 232.44, the highest since February 17. The metal for June delivery climbed as much as 0.5% to $1 232 on the Comex in New York.

Speculators’ net-long position jumped 14% to 36 150 futures and options as of May 12, US 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% 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 to April 29 meeting on May 20.

Silver for immediate delivery rose as much as 1.6% to $17.7815 an ounce, the highest since January 29, before paring gains to $17.7278. Palladium fell 0.2% to $792.30 an ounce, while platinum was little changed at $1 168.05 an ounce.