Gold climbs as Federal Reserve holds off on raising rates

by |

(Bloomberg) -- Gold advanced as the Federal Reserve refrained from raising interest rates until at least its December meeting, saying it sees the economy expanding at a “moderate” pace.

Bullion for immediate delivery climbed as much as 0.6 percent to $1,162.81 an ounce before trading at $1,159.80 at 3:29 p.m. in Singapore, according to Bloomberg generic pricing. The metal retreated 0.9 percent to $1,156.10 on Wednesday, the lowest since Oct. 8. Higher borrowing costs dent the appeal of the metal as it doesn’t pay interest.

“It’s had a bounce, and if you look at what happened after the Fed announcement it had sold off very sharply,” Jordan Eliseo, chief economist at trader Australian Bullion Co. in Sydney, said by phone. “It’s not surprising now to see the market just find its feet a little more.”

Traders see a 48 percent chance the U.S. central bank will raise its benchmark rate from near zero at its next meeting, futures data compiled by Bloomberg show. That’s up from 37 percent before the Federal Open Market Committee’s statement Wednesday. Policy makers left borrowing costs unchanged, while giving themselves the option to boost rates at their next meeting.

A rate rise in December is “still on the cards” as the Fed sees solid consumer spending and business investment, said Barnabas Gan, the top-ranked precious metals analyst at Oversea- Chinese Banking Corp. in Singapore. Investors will be watching U.S. economic indicators such as factory orders and the non-farm payrolls next week, he said.

Gold for December delivery fell 1.4 percent to $1,159.30 an ounce on the Comex in New York. Palladium fell, while silver and platinum held gains.