Gold climbs as Fed governor Brainard's outlook cuts rate bets

[SINGAPORE] Gold rose after Federal Reserve governor Lael Brainard said that there's no reason to rush to raise US interest rates, putting a further dent in expectations for an increase over the remainder of 2016.

The metal for immediate delivery gained as much as 0.3 per cent to US$1,332.15 an ounce and traded at US$1,328.98 at 2:37pm in Singapore, according to Bloomberg generic pricing. The rise followed a four-day, 1.6 per cent retreat.

Gold investors are in thrall to comments from Fed officials in a bid to discern the trajectory of US monetary policy. While Boston President Eric Rosengren said on Friday the economy could overheat if policy makers wait too long, Ms Brainard said on Monday there's no reason to rush.

That cut the odds of a hike this month to 22 per cent from 30 per cent on Friday, futures prices indicate.

"Brainard stuck to her message on exercising caution and prudence," Bryan Lum, a Singapore-based strategist with Phillip Futures Pte, said in an e-mail.

"Interest rate expectations corrected accordingly" and helped set a price floor, which will likely remain supported until inflation numbers this Friday, he said.

The Labor Department is due to release US consumer price index data for August on Sept 16.

BLOOMBERG