Gold climbs as US rates seen steady

Singapore - Gold rose for a second day amid speculation that Federal Reserve policy makers will again stay their hand on an interest rate increase when they gather this week, opting instead to signal the potential for a hike at the year’s final meeting in December.

Bullion for immediate delivery advanced as much as 0.3% to $1 316.68 an ounce and traded at $1 315.86 at 2:30 in Singapore, according to Bloomberg generic pricing. The metal climbed 0.2% on Monday and is up 24% this year.

Gold’s rally in the first half of the year has stalled amid uncertainty over global monetary policy. This week, investors are focusing on the decision and outlook from the Fed as well as a meeting at the Bank of Japan, with traders split over what Governor Haruhiko Kuroda will do as he weighs whether to press on with negative rates and add stimulus. The odds of a US hike this week are just 20%, with a 56% chance seen for December.

"The odds are that they’re not going to do anything in September, but talk tough and keep December on the table," Michael Cuggino, president of Pacific Heights Asset Management, said in a Bloomberg TV interview.

"But there is three more months’ of data and global activity and employment reports and inflation information that will come out between now and then, so even December’s not a given."

The BOJ will announce its decision on Wednesday at the conclusion of a two-day meeting that includes a comprehensive review of its policy program. Governor Kuroda is scheduled to hold a press conference.

The Fed statement will follow later on Wednesday, with a news conference from Chair Janet Yellen.

Holdings in exchange-traded funds backed by the metal lost 2.7 metric tonnes to 2 021.6 tonnes on Monday, data compiled by Bloomberg show.

In China, bullion of 99.99% purity declined 0.2% to 283.34 yuan a gram ($1 321.31 an ounce) on the Shanghai Gold Exchange On the Shanghai Futures Exchange, gold for December delivery was little changed at 284.75 yuan a gram, while silver rose 0.2% to 4 294 yuan a kilogram.

Spot silver gained 0.2%, platinum advanced 0.5% and palladium climbed 0.1%.