September 17, 2015

Gold Holds Advance as U.S. Inflation Seen Taming Rate Concern

(Bloomberg)- Gold traded near a one-week high after a report showed U.S. consumer prices fell, easing concern that Federal Reserve policy makers will raise rates for the first time since 2006 when they end a two-day meeting on Thursday.

Bullion for immediate delivery rose 0.2 percent to $1,121.16 an ounce at 10:56 a.m. in Singapore, according to Bloomberg generic pricing. The price climbed as much as 1.7 percent on Wednesday, the biggest intraday gain since Aug. 20, to $1,124.32, the highest since Sept. 9.

Gold, historically sought as a store of value as consumer prices rise, is instead benefiting from doubts on how soon inflation will return to the Fed’s 2 percent target as that may restrain the pace at which rates rise. The consumer-price index fell 0.1 percent in August to post the first drop since January, Labor Department figures showed Wednesday. Fed-fund futures show a 32 percent chance of a 25 basis point rise, according to data compiled by Bloomberg.

“Slightly weaker-than-expected U.S. inflation data overnight eased concerns that the Fed will raise interest rates this week, which helped support gold prices,” analysts including Daniel Hynes at Australia & New Zealand Banking Group Ltd. wrote in a report Thursday.

Holdings in global exchange-traded products backed by bullion dropped a seventh time in eight days through Tuesday and were at the lowest since Aug. 19, according to data compiled by Bloomberg.

Silver dropped 0.1 percent to $14.8965 an ounce after a 3.4 percent surge at the close on Wednesday, the most since May 13. Platinum fell 0.2 percent to $971.49 an ounce and palladium lost 0.4 percent to $609.65 an ounce.