Gold treads water as investors count down to Yellen's address

[SINGAPORE] Gold is treading water before a speech by Federal Reserve Chair Janet Yellen on Friday that may shed light on the U.S. central bank's tightening path, with prices closing within a US$4 range since Friday.

Bullion for immediate delivery was at US$1,337.07 an ounce at 3:13 pm in Singapore, according to Bloomberg generic pricing, from US$1,337.56 on Tuesday, the lowest close since Aug 12.

Gold's in a holding pattern after a 26 per cent rally this year as comments from Fed officials are parsed for clues on the timing of any increase. After several policy makers signaled in recent days that tighter policy may be warranted this year, investors are counting down toward Ms Yellen's speech at the annual Jackson Hole symposium. Higher borrowing costs typically damp the appeal of bullion.

"Yellen's speech at Jackson Hole will be one that investors will watch closely to see if she will provide a clear idea on the next steps," Brian Lan, managing director of Singapore-based GoldSilver Central Pte Ltd, said in an e-mail.

"Fed officials have mixed views on whether to have a rate hike and if the US economy is well enough for that to occur."

The Bloomberg Dollar Spot Index climbed for a fourth straight day. Odds of a hike in December have climbed to 54 per cent from 51 per cent a day earlier and 36 per cent at the start of the month, according to futures prices compiled by Bloomberg.

The boards of directors at eight of the 12 regional Fed banks sought last month to increase the rate on direct loans from the Fed to 1.25 per cent from 1 per cent, according to details from the US central bank Tuesday. The votes can signal whether a bank's president favours a change in the main policy rate.

Holdings in bullion-backed exchange traded funds added 0.5 metric ton to 2,031.7 tons on Tuesday, data compiled by Bloomberg show.

In China, bullion of 99.99 per cent purity was little changed at 286.91 yuan a gram on the Shanghai Gold Exchange.

On the Shanghai Futures Exchange, gold for December delivery was little changed at 287.40 yuan a gram, while silver fell 0.5 per cent to 4,209 yuan a kilogram.

Silver climbed 0.2 per cent, while platinum and palladium were little changed on global markets.

BLOOMBERG