Bullion extended gains the fourth consecutive session on Wednesday, reaching a fresh three-month high at 1175.96 US Dollar amid signs of a weakening economy of China.
“Weaker Chinese data has given gold a lift,” Jonathan Butler, a precious metals strategist at Mitsubishi Corp. in London, said by phone. “Indicators in China are trending towards outright deflation, which raises the potential for further stimulus and should be positive for gold.
Bullion has been appreciating since the publication of weak U.S. nonfarm payrolls report earlier this month that prompted the market to shift expectations of a U.S. rate hike to 2016 and sell the dollar.
Unpromising Chinese economic data on Wednesday added concerns about global growth, another factor investors believe could deter the Fed from hiking rates this year.
Fed policy divisions were highlighted Tuesday as Governor Daniel Tarullo argued interest rates should stay on hold while documents showed most regional Fed directors sought higher borrowing costs. Fed Chair Janet Yellen said on Sept. 24 that she expected the first increase since 2006 to be warranted by the end of the year. The odds of a rate liftoff in December are 34 percent while the chances for a move in March are 56 percent, futures data show.
Forex Corporate Research Department.
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