Investing.com -- Gold future prices spiked on Wednesday reaching a three-week high, as weak data on U.S. durable goods strengthened the case for delaying a potential interest rate hike.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery rose 5.00 or 0.42% to 1,196.40 a troy ounce. At one point in morning trading on Wednesday, gold nearly cleared 1,200 an ounce as it reached a daily-high of 1,199.30. Gold futures had not reached that level since Mar. 6 when it experienced one of its sharpest one-day declines of the year, amid expectations of an imminent rate hike.
Gold had been in freefall until Mar. 17, as speculation mounted that the Federal Reserve could raise interest rates as early as June. Last week, gold futures plunged to a four-month low of 1,148.20 ahead of the Fed's decision to remove its stance of remaining patient on the timing of a potential rate hike. Still, relatively dovish comments from Fed chair Janet Yellen on slower long-term increases for inflation, interest rates and GDP growth have fueled speculation that the Fed could raise its benchmark Federal Funds Rate later than previously had been expected.
The comments initiated a furious rally for the precious metal. Gold struggles to compete with yield-bearing assets in periods of raising interest rates. On Wednesday, the U.S. Department of Commerce said in a monthly report that durable or long-lasting goods orders dipped by a seasonally adjusted 1.4% for the month of February. Orders for January were also revised downward to a 0.1% decline for the month. As a result, investment spending by U.S. businesses has dropped for six straight months.
The soft data weighed on the dollar, as the U.S. Dollar Index fell slightly by 0.30% to 97.14 in U.S. afternoon trading. The index measures the strength of the greenback against a basket of six other major currencies. Dollar-denominated commodities such as gold become less expensive for foreign purchasers in periods of a weaker dollar.
In New Delhi, prices for 24-carat gold rose 0.23% to Rs 26,690 per 10 G. The modest price gains come days after International Monetary Fund Christine Lagarde said that the Indian economy for fiscal year 2015-2016 is expected to grow at a higher rate than China. The Asian nations are the two largest purchasers of gold in the world, representing more than 50% of all global purchases.
Elsewhere, silver futures for May delivery inched up 0.010 or 0.06% to 16.99 a troy ounce.
Copper futures for May delivery fell 0.011 or 0.37% to 2.793 a pound. Earlier this week, copper reached a three-month high at 2.945.