Gold hits six-week high
Gold has closed at its highest level in six weeks as investors seek the safety of the precious metal amid reports that the European Central Bank may take more easing measures.
The most actively traded contract, for December delivery, rose $US7, or 0.6 per cent, to $US1,251.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
This was the highest settlement since September 8, when futures closed at $US1,254.30 an ounce.
Gold prices advanced after reports that the ECB was considering buying corporate bonds, with the aim of bolstering the euro-area economy.
The move highlights long-running concerns about the region's faltering growth, boosting traders' appetite for protective assets like gold.
"Investors in gold are more interested in the fact that a soft landing is not going to happen," said James Cordier, president with Liberty Trading Group.
Europe's problems have been a vexing point for the Federal Reserve, which highlighted slowing growth in the eurozone as a risk for the US recovery.
As a result, "traders are now starting to push their outlook for a rate increase back even further," said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.
While just a few months ago, consensus expectations had pegged the Fed's first interest-rate increase since 2006 to occur as early as March 2015, those forecasts were subsequently pushed back to July and now to October 2015, he said.
Gold is likely to benefit from the extended period of low interest rates as the precious metal doesn't earn interest or dividends and has an easier time competing with interest-bearing assets like Treasury bonds.
Turbulence in US equity markets has also burnished gold's allure as a haven to some investors. Stocks have declined for four straight weeks, with the Dow Jones Industrial Average erasing its gains for the year. The downdraft led some investors to seek protection in gold on the belief that it will keep its value better than stocks during this period of uncertainty.
"There's a lot of buy-and-hold gold bulls that have popped back into the market...the phones are ringing again with those guys," Haberkorn said.
