Gold climbs as US rates seen steady even as Fed 'talks tough'

[SINGAPORE] Gold rose for a second day amid speculation that Federal Reserve policy makers will again stay their hand on an interest rate increase when they gather this week, opting instead to signal the potential for a hike at the year's final meeting in December.

Bullion for immediate delivery advanced as much as 0.2 per cent to US$1,315.80 an ounce and traded at US$1,315.49 at 9:45am in Singapore, according to Bloomberg generic pricing. The metal climbed 0.2 per cent on Monday and is up about 24 per cent this year.

Gold's rally in the first half of the year has stalled amid uncertainty over global monetary policy. This week, investors are focusing on the decision and outlook from the Fed as well as a meeting at the Bank of Japan, with traders split over what Governor Haruhiko Kuroda will do as he weighs whether to press on with negative rates.

The odds of a US hike this week are just 20 per cent, with a 56 per cent chance seen for December.

"The odds are that they're not going to do anything in September, but talk tough and keep December on the table," Michael Cuggino, president of Pacific Heights Asset Management LLC, said in a Bloomberg TV interview.

"But there is three more months' of data and global activity and employment reports and inflation information that will come out between now and then, so even December's not a given."

BLOOMBERG