Investing.com -- Gold futures surged to its highest level in more than two weeks, as traders digested dovish comments from the Federal Reserve suggesting that drastic improvements are needed in the global economy before the U.S. central bank lifts its benchmark interest rate for the first time in nearly a decade.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range wavered between a session low of $1,126.90 and a high of $1,141.20 an ounce, reaching its highest level since September 1. On Friday, gold extended overnight gains from the Asian session when it added more than $10 an ounce, after the Fed held short-term interest rates at its current level between zero and 0.25%.
At the close of trading, gold settled at $1,137.30, up $20.30 or 1.82% on the session. The precious metal also enjoyed one of its strongest weeks of the year, jumping by nearly 3% over the five-day stretch.
Gold likely gained support at $1,104.10, the low from Sept. 14 and was met with resistance at $1,169.00, the high from Aug. 24.
Investors continued to react to a relatively dovish statement from the Federal Open Market Committee on Thursday, which voted to leave its benchmark Federal Funds Rate unchanged, after citing broad weakness in the global economy. In the September monetary policy statement, the FOMC reiterated that it would like to see improvements in the labor market and signals that inflation is moving toward its long-term targeted goal of 2% inflation before it raises rates for the first time since 2006. Still, 13 of the 17 members present at the meeting predicted that the FOMC will raise the Fed Funds Rate by at least 0.25% by the end of the year.
Despite expressing significant concerns with the pace of economic growth globally, Fed chair Janet Yellen appeared more optimistic with the developments of the U.S. economy since the FOMC last met in July. The U.S. labor market, she said, is moving closer to full employment, which creates upward pressure on inflation.
The Fed is expected to keep a close eye on the September national employment report for indications of continued wage growth. While non-farm average hourly earnings ticked up by 0.3% in August from the previous month, they were up only 2.2% from their level in August, 2014. On an inflation-adjusted basis, wage gains have remained virtually flat over the last five years. Over the second quarter, U.S. labor costs inched up 0.2%, recording their smallest increase in more than 30 years.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.30% to an intraday high of 94.98, before falling back slightly to 94.89. With several hours left in the trading week, the index was on pace to close down by approximately 0.5% on the week.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for December delivery gained 0.211 or 1.41% to 15.195 an ounce.
Copper for December delivery fell 0.066 or 2.66% to 2.386 a pound.