Gold price extends advance as Fed breathes life into demand

Seattle (Sept 24)  Gold is on a roll, courtesy of the Federal Reserve. The precious metal is heading for the biggest weekly advance since July after U.S. central bankers opted to leave interest rates unchanged while reining in their outlook for future increases.

Investors added 6.3 metric tons to exchange-traded funds backed by gold this week through Thursday, data compiled by Bloomberg show.

Bullion has awakened from a slumber after Fed rate concerns had helped wipe out gains for the quarter. Money is pouring back in as low borrowing costs in the U.S. and economic stimulus by central banks from Japan to Europe drive demand for the precious metal as a store of value.

“The fact that they didn’t raise rates breathes some life back into the gold market,” Bob Haberkorn, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Traders are in a buy-and-hold mode right now. They’re looking at adding to positions.”

Prices climbed 2 percent this week, the most since July 29, according to Bloomberg generic pricing. Gold futures for December delivery had a 2.4 percent advance this week, the biggest rally since June 10.

Source: SeattleTimes