Gold Futures Gain On Speculation Of More Stimulus From US Fed

Gold Futures Gain On Speculation Of More Stimulus From US Fed

$GLD, $SLV, $PPTL

Gold futures gained for the 1st time in a week as a Fed official signaled the possibility of more monetary stimulus, boosting bullion’s appeal as a hedge against coming inflation.

Minneapolis Fed President Narayana Kocherlakota sees ways to lower interest rates ahead, citing asset-purchase tools, he said in a TV interview Friday.Gold fell in the previous two months as a resilient U.S. economy spurred speculation that officials would start tightening monetary policy.

Gold has rebounded in August as US equities dove on fears that a slowdown in China’s economy may affect global growth, boosting the belief that the Fed could delay an increase in interest rates. Higher rates curb the appeal of gold because it doesn’t pay interest or offer returns, unlike competing assets.

“Kocherlakota’s comments are 100 percent what this is about,” a trader in New York, said in a interview. “Lower interest rates means a weaker dollar and strong Gold, and lower interest rates are always positive for Gold.”

Gold futures for Dec delivery climbed 1% to settle at 1,134 oz at 1:56 p on the COMEX in New York, the 1st gainer since 21 August.

Investors bought 1.8 tonnes through Gold-backed funds  Thursday. Holdings reached 1,529.4 tonnes, the highest since 30 July.

The Fed’s Kocherlakota, who doesn’t vote on policy this year, cited low inflation as a concern in raising interest rates too quickly in his interview in Jackson Hole, WY, where central bank officials are gathered for an annual conference.

St. Louis Fed President James Bullard said that while world financial markets are volatile, US fundamentals are good.

Note: Gold headed for the biggest weekly decline in a month as investors weigh the jawboning from the FOMC policy makers.

Silver (COMEX) futures for Dec delivery added 0.8% to 14.549 oz.

Platinum (NYMEX) futures for Oct delivery climbed 1.6% to 1,021.70 oz.

Palladium (NYMEX) futures for Dec delivery increased 3.9% to 590.15 oz.

Have a terrific weekend.

HeffX-LTN

Paul Ebeling

 

 

 

 

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