Gold Advanced to Its Highest Level in Four Weeks

by on October 13, 2014 12:17 pm BST

Gold climbed to the highest in almost four weeks as concern that global growth is slowing stoked bets the U.S. Federal Reserve may push back interest-rate increases, sending the dollar lower and boosting demand for a protection of wealth.

Bullion rose as much as 1.2 percent in London trading, extending last week’s 2.7 percent gain, a measure of the greenback against 10 major currencies, retreated 0.4 percent to extend its first weekly decline in eight weeks. Federal Reserve Vice Chairman Stanley Fischer said at the weekend that U.S. rate increases could be delayed by slowdowns elsewhere.

Gold also gained on speculation that buying of the metal in India picked up before its wedding season and Diwali festival. Global equities measured by the MSCI All-Country World Index were little changed, after dropping 2.7 percent last week, as investors weighed global-growth prospects and central-bank stimulus policies.

Gold for immediate delivery rose 0.4 percent to $1,227.90 an ounce at 11:26 a.m. in London, after earlier today touching $1,237.86, the highest price since Sept. 17.

Gold fell 28 percent last year, the most in three decades, as investors anticipated higher interest rates. Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value.

The International Monetary Fund last week cut its forecast for global growth and said the euro area faces the risk of a recession. Traders see about a 26 percent chance the Fed will raise its benchmark rate by its July 2015 meeting, down from 59 percent on Sept. 18.

Silver for immediate delivery climbed 0.4 percent to $17.4673 an ounce, after increasing 3.3 percent last week. Platinum was little changed at $1,262.74 an ounce, while palladium rose 0.3 percent to $787.76.