Gold Prices Hit Three-Week High on Interest-Rate Expectations

25-Mar (Wall Street Journal) — Gold prices rose to their highest level in three weeks on Wednesday, as weak U.S. data bolstered the argument the Federal Reserve would likely take its time before raising interest rates.

Gold for April delivery, the most actively traded contract, closed up 0.5% at $1,197.00 a troy ounce, the highest settlement since March 4.

Demand for big-ticket manufactured goods sank last month, data from the Commerce Department showed, in a sign that U.S. companies are still cautious about spending amid weak global demand. The numbers offer further evidence of an uneven U.S. economic recovery, lending credence to those who believe the Fed will need to wait longer than previously expected to raise interest rates. That is good news for gold, which struggles to compete with yield-bearing investments when rates rise.

The data “subdues growth expectations and implies further upside for gold,” said Bart Melek, head of commodities strategy at TD Securities. Prices are likely to reach $1,250 an ounce in the second quarter, Mr. Melek said.

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