Gold poised for fourth monthly gain on US Fed rate-cut optimism

A series of comments by US Federal Reserve officials support a rate cut in December, which typically benefit gold as it doesn’t pay interest.

Gold rose, on track for a fourth monthly gain, on heightened expectations for another interest-rate by the US Federal Reserve. Silver advanced to within a dollar of a record.

Gold has consolidated above the $4,000-an-ounce level since pulling back from its peak.(AFP)

Gold prices rose 0.8% to $4,190.17 an ounce as of 10:03 am in Singapore, up nearly 5% for the week. The Bloomberg Dollar Spot Index was flat. Platinum edged up after jumping 1.6% on Thursday as new futures contracts in China aided demand. Palladium also increased. Silver prices rose as much as 1% to near record set last month, supported by ongoing supply tightness as well as inflows to ETFs and rate-cut prospects.

A series of comments by the US Federal Reserve officials and the release of delayed economic data have supported the case for lower borrowing costs, which typically benefit gold as it doesn’t pay interest. Swap traders are pricing in a more than 80% chance of a quarter-point cut in December.

Traders will be digesting every last clue for the next rate decision before the US central bank goes into an external communication blackout starting Saturday. A record-setting government shutdown has delayed key data, and some statistics will not be released at all, making it challenging for the Fed and investors to assess the state of the world’s largest economy.

Bullion has gained nearly every month this year, and is on track for its best annual performance since 1979. Elevated central-bank buying as well as robust non-sovereign inflows to exchange-traded funds supported the metal’s run to a record above $4,380 last month. Investors have piled into alternative assets in a wider retreat from sovereign bonds and currencies.

This month, the precious metal has consolidated above the $4,000-an-ounce level since pulling back from its peak. For the last four weeks, inflows to gold-backed ETFs have been flat, according to Bloomberg calculations.