Spot gold rose by 1.02 percent against US dollar to 1,146.75 during yesterday’s session touching $1,151.05, its highest level since September 24.
American exports were hit by a weakening global economy in August and imports from China surged, resulting in the highest U.S. trade deficit in five months according to Bureau of Economic Analysis published on Tuesday.
Moreover, the figures, which followed a lower than expected readings of nonfarm payrolls last week, strengthened expectations that the Fed will delay increasing rates until 2016.
According to Robin Bhar, the market sees gold taking advantage of the decision by the Fed not to raise rates and doesn't see any scope for the committee to raise rates anytime soon.
Gold has come under pressure from expectations that the Fed is set to hike interest rates this year, potentially raising the opportunity cost of holding non-yielding bullion.
Fed Chair Janet Yellen said last month she expected the U.S. central bank to begin increasing rates this year, however, weak U.S. economic data and caution about the global economy have prompted many to push back expectations.
A possible delay in a rate hike has also weighed on the dollar, which has been supportive for the gold market by making the metal cheaper for holders of other currencies.
Concerns about the health of the global economy were reinforced on Wednesday when data showed German industrial output for August posted its sharpest drop in a year.
The International Monetary Fund also fueled concerns when it cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China.