Gold price climbs to one-month high
New York (Aug 19) Gold prices have risen to a one-month high as the uncertain outlook for the Chinese economy supported demand for a metal that is considered a hedge against risk.
Prices extended their gains in late trading, after minutes from the Federal Reserve's July policy meeting showed mixed views on when the central bank should raise interest rates.
The most actively traded contract, gold for December delivery, settled up $US11, or 1 per cent, at $US1,127.90 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest settlement since July 17.
Investors are worried about the health of the Chinese economy after the devaluation of the yuan last week and a string of weak economic data. The metal often attracts investors in times of heightened financial, social or political unrest because it is considered a safe store of value and it is seen as an effective way to offset risk.
"Nervousness over the yuan is helping to stabilize [gold] prices," Peter Cardillo, chief market economist at Rockwell Global Capital, said in a note.
The minutes from July's Federal Open Market Committee meeting, which were released earlier than expected Wednesday afternoon, did not offer a clear signal that the Fed is planning to raise interest rates at its next meeting. Higher interest rates are expected to weigh on gold prices, as the metal has an easier time competing with Treasury bonds and other interest-bearing assets as an investment when rates are pinned near zero.
The US dollar weakened against other major currencies after the minutes were released. The WSJ Dollar Index, which tracks the greenback against a basket of major currencies, recently traded down 0.4 per cent. Gold, which is priced in dollars, becomes cheaper for buyers using other currencies when the dollar weakens.