Gold holds gain as investors weigh rates outlook, risk appetite

[SINGAPORE] Gold held an advance on speculation that the US central bank will probably slow the pace of rate increases this year as global market turmoil and weaker growth impact the world's largest economy.

Bullion for immediate delivery traded at US$1,208.86 an ounce at 8:57 am in Singapore, from US$1,208.50 on Wednesday, when the metal climbed 0.7 percent, according to Bloomberg generic pricing.

It's up 14 per cent in 2016, gaining to the highest level in a year last week.

Gold is this year's best performing commodity on demand for a haven as US rate expectations ebb. Minutes from the Fed's January meeting released Wednesday showed policy makers are worried about potential drags on the US economy.

Separately, Fed Bank of St Louis president James Bullard said market turmoil that's contributed to a drop in investors' expectations for inflation has given the bank scope to delay increases.

The "minutes showed policy makers expressed concern that the fall in commodity prices and the rout in financial markets increasingly posed risks to the US economy," analysts at Australia & New Zealand Banking Group Ltd said in a report.

The outlook for rates to stay low has boosted gold's appeal because it doesn't pay interest like some other assets.

BLOOMBERG