Gold Prices Gain Nacely To Extend Three-Month High

San Francisco (Oct 13)  Gold prices carved out a slight gain on Tuesday, as stocks retreated and as some investors continued to hope the Federal Reserve would stand pat on interest rates.

Gold for December delivery, the most actively traded contract, rose 90 cents, or 0.1%, to settle at $1,165.40 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the highest close since July 6, when prices settled at $1,173.20 an ounce.

Gold prices have pushed higher in recent weeks, after disappointing U.S. employment data stoked hopes of a prolonged period of low borrowing costs. Federal Reserve officials voted to put off raising rates in September, and minutes from the latest policy meeting showed members were concerned about the impact of overseas turmoil on the U.S. recovery. Any delay to higher rates benefits gold, which has an easier time competing with Treasury bonds while rates are pinned near zero.

"The idea that the Fed is now going to remain patient with their first rate hike is what really started this move to the upside in gold," said Dave Meger, director of High Ridge Futures in Chicago.

A weaker tone to U.S. equities also lent gold prices some support. The S&P 500 was recently down 0.6% at 2006.01, while the Dow Jones Industrial Average was down 0.3% at 17,088.4. Gold and stocks often move in opposite directions, as investors buy gold to shield against economic or political upheaval but shed it in favor of stocks when the economic outlook brightens.

"The downside in U.S. equities has caused some haven buying in gold," said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.