Gold extends biggest jump since Brexit on lowered Fed rate bets

Singapore - Gold built on its biggest daily increase since June and traded near the highest in almost three weeks as the dollar weakened amid diminishing chances of a US interest-rate rise in September.

Bullion for immediate delivery was 0.2% higher at $1 352.16 an ounce at 11:29 a.m. in Singapore, after surging 1.7% on Tuesday, the most since the results of the Brexit vote on June 24, according to Bloomberg generic pricing.

The metal has resumed its rally this year on reduced chances of the Federal Reserve tightening monetary policy this month after the Institute for Supply Management’s index of US non-manufacturing industries slumped to its lowest level since February 2010.

A gauge of the greenback traded at the lowest level this month. The Federal Open Market Committee meets on September 20 to 21.

"The US dollar remains the key factor driving the gold price," said David Lennox, a resource analyst at Fat Prophets in Sydney.

'The latest sets of data out of the US would tend to suggest no change in the Fed’s stance is likely, and hence the US dollar may weaken a little and gold firm up pre-FOMC."

Odds of the Fed raising rates this month slid to 24% as of Tuesday from 34% at the start of September, according to Fed funds futures tracked by Bloomberg.

Lacklustre manufacturing data and evidence of a slowdown in hiring have also fuelled concerns over US growth.

Still, Fed Bank of San Francisco President John Williams painted an upbeat picture of the US economy in a speech on Tuesday, despite the recent disappointing data, saying it made sense to get back to a pace of gradual rate increases.

Holdings in bullion-backed exchange traded funds added 13.8 metric tonnes to 2 031 tonnes on Tuesday, data compiled by Bloomberg show.

In China, bullion of 99.99% purity rose 1.3% to 290.10 yuan a gram ($1 353.13 an ounce) on the Shanghai Gold Exchange.

On the Shanghai Futures Exchange, gold for December delivery gained 1.5% to 291.10 yuan a gram, while silver surged 2.2% to 4 440 yuan a kilogram. Spot silver fell 0.1%, platinum advanced 0.5%, and palladium climbed 1%.

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