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New York - Gold advanced to the highest in two weeks as a weakening dollar attracted buyers in exchange-traded funds backed by the metal amid mounting speculation that US interest-rate increases will be gradual.
The Bloomberg Dollar Spot Index fell for a third day, the longest losing streak in three weeks, a day after a report showed a core US inflation gauge rose less than estimated in September. That bolstered speculation the Federal Reserve won’t move aggressively in raising borrowing costs.
“We’ve seen a little reprieve from concerns about higher interest rates,” David Meger, the director of metals trading at High Ridge Futures in Chicago, said in a telephone interview. “We’re seeing a little bit of a rebound as the dollar now sells off.”
Gold futures for December delivery rose 0.6% to $1 270.50 an ounce at 10:36 on the Comex in New York, after reaching $1 273.50, the highest intraday since October 5. Prices are set for a third straight gain, the longest winning streak since September 22.
Investors boosted their holdings in ETFs backed by gold for a fifth straight session, extending gains to the highest in more than three years.
A Labor Department report on Tuesday showed that while the cost of living in the US rose at the fastest pace in five months in September, the increase in prices excluding volatile food and fuel costs trailed estimates. The odds that interest rates will rise by December fell to 63% after the data Tuesday, down from 68 percent a week earlier. Lower rates boost the competitiveness of bullion against interest-bearing assets such as bonds.
The precious metal is set to rise to $1,347.40 an ounce by the time of the next London Bullion Market Association conference in October 2017, according to a survey of people attending this year’s gathering in Singapore, which ended on Tuesday. Silver will gain to $20.90, the survey showed.
Silver futures were little changed at $17.645 on the Comex, while platinum and palladium futures declined on the New York Mercantile Exchange.
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