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Gold heads for biggest gain in two weeks on easing rate concerns
[NEW YORK] Gold futures headed for the biggest gain in more than two weeks after signs of slowing US economic growth eased concern that the Federal Reserve will raise interest rates soon.
Gold futures for August delivery rose 0.9 per cent to US$1,200.10 an ounce at 9.34 am on the Comex in New York, poised for the biggest increase since May 13. Prices are heading for a third straight gain, the longest streak since May 18.
US consumer purchases unexpectedly stalled in April, Commerce Department figures showed on Monday. Fed Bank of Boston President Eric Rosengren, who doesn't vote on policy this year, said that growth is still too slow to warrant rate increases.
The metal swung between year-to-date gains and losses more than 10 times in 2015, as traders tried to gauge when the central bank would boost borrowing costs. Higher interest rates erode the appeal of gold, which doesn't pay interest, as investors seek higher-yielding assets, including new bonds.
"A combination of weak personal spending data and dovish comments from a Fed official helped gold move higher," Tai Wong, the director of commodity-products trading at BMO Capital Markets Corp in New York, said in a telephone interview. "The economy has been sputtering, so the case for a rate hike is becoming weaker."