Gold Rises on U.S. Interest-Rate Hopes

Washington (Dec 21)  Gold prices rose Friday, buoyed by comments from the Federal Reserve earlier in the week that suggested the central bank is in no hurry to raise U.S. interest rates from rock-bottom levels.

Gold for February delivery, the most actively traded contract, settled up $1.20, or 0.1%, at $1,196.00 a troy ounce on the Comex division of the New York Mercantile Exchange.

Platinum for January delivery eased 10 cents to $1,197.00 a troy ounce, putting it just $1 above gold prices.

Prices for platinum have been capped for the past few weeks, as industrial producers take a year-end break from buying the precious metal, said Peter Hug, global trading director at Kitco Metals, in a note to investors.

On Wednesday, the Fed left unchanged the part of its postmeeting statement, saying rates would remain low for a “considerable time,” a phrase many investors expected the central bank to discard as the U.S. economy continues to grow. That was good news for gold, which pays no dividend to its holders and struggles to compete with yield-bearing investments in times of rising interest rates.

Gains for the precious metal, however, were capped by a stronger dollar and big gains in global stock markets. Gold, which is priced in dollars, becomes more expensive to foreign investors when the dollar appreciates. Rising stock markets also tend to draw money away from gold.

Source: WSJ