Update: Gold climbs to one-week high on signs of slowing economic growth

[SINGAPORE] Gold advanced to the highest level in more than a week on speculation that the Federal Reserve will refrain from increasing US interest rates this year on further signs of slowing global economic growth.

Bullion for immediate delivery rose as much as 0.5 per cent to US$1,153.12 an ounce, the highest level since Sept 25, and was at US$1,151.73 at 2.45 pm in Singapore, according to Bloomberg generic pricing.

Gold has rebounded from a five-year low in July as turmoil in emerging markets, slower growth in China and patchy US economic data have hurt the outlook for tighter monetary policy from the Federal Reserve. The International Monetary Fund on Tuesday cut its outlook for global growth this year, stoking the case for the Fed to hold off on a move. Higher rates curb the appeal of gold because it doesn't pay interest.

"We're definitely getting the feeling that the market is starting to price in a lower probability of the Fed raising rates over the next few months," Daniel Hynes,senior commodity strategist at Australia & New Zealand Banking Group, said by telephone from Sydney. "That's clearly better for the gold market, with the specter of lower yields benefiting the precious metal."

The US trade deficit widened in August by the most in five months as a strong dollar and weakness in economies such as China impeded sales prospects for American companies, according to data Tuesday. Goldman Sachs Group this week raised the possibility that the Fed may not raise rates until well into 2016.

There's a 36 per cent probability that rates will rise by December, down from 43 per cent as of Oct 1, according to Fed fund futures data compiled by Bloomberg. The odds increase to 58 per cent for a move in March. Holdings in gold-backed exchange traded funds fell 1.05 metric tons to 1,530.74 tons as of Tuesday, data compiled by Bloomberg show.

Silver rose 0.4 per cent to US$15.9548 an ounce, after gaining to US$16.0955 on Tuesday, the highest since June 23. Platinum climbed one per cent to US$945.21 an ounce, while palladium advanced 0.7 per cent to US$711.75 an ounce.

BLOOMBERG