24 March 2015
Gold Trades Close to Two-Week High on U.S. Interest-Rate Outlook
(Bloomberg) - Gold traded close to the highest in two weeks amid speculation that U.S. policy makers will hold off on raising interest rates until later this year.
Federal Reserve Chair Janet Yellen signaled last week that the central bank is in no hurry to raise rates after the Fed dropped a pledge to be patient on tightening. Higher borrowing costs cut gold’s allure because the metal generally offers returns only through price gains.
The dollar touched the lowest in two weeks against a basket of 10 currencies after after Fed Vice Chairman Stanley Fischer said on Monday that while higher rates will probably be warranted by before the end of the year, policy makers want to be “reasonably confident” that inflation is rising toward their 2 percent goal.
“The market believes that the Fed will not be aggressive about the rate hike, giving a boost to gold,” Alfonso Esparza, a senior currency analyst at Oanda Corp. in Toronto, said in a telephone interview. “Also, the dollar weakness is keeping gold supported.”
Gold for immediate delivery fell 0.1 percent to $1,188.72 an ounce at 9:57 a.m. New York time after reaching $1,195.15, the highest since March 6, according to Bloomberg generic pricing.
On the Comex in New York, gold futures for April delivery rose 0.1 percent to $1,188.50. Aggregate trading was 36 percent above the 100-day average for this time, data compiled by Bloomberg show.
Holdings in exchange-traded products backed by gold rose on Monday for the first time in a month.
The cost of living in the U.S. excluding food and fuel rose more than forecast in February, reflecting broad-based gains that helped keep a floor under inflation, a government report showed on Tuesday.
The chances of Greece exiting the euro are 50-50, and the country could go “down the drain,” billionaire investor George Soros said in a Bloomberg Television interview due to air Tuesday.
Greece needs to persuade its creditors to sign off on a package of economic measures to free up long-withheld aid payments that will keep the country afloat.
“The sentiment has changed since the Fed meeting last week,” Ole Hansen, an analyst in Copenhagen at Saxo Bank A/S, said in a telephone interview. A weaker dollar and Greek turmoil boosted gold, he said.
Spot silver fell 0.4 percent to $16.91 an ounce. The price rose in the previous four sessions, the longest rally since Nov. 25.