(Bloomberg) -- Gold advanced to an eight-month high as investors awaited clues about the outlook for U.S. monetary policy, with Federal Reserve Chairman Jerome Powell scheduled to hold a news conference later Wednesday after the central bank’s inaugural rate-setting meeting of 2019.
Spot bullion rose as much as 0.2 percent to $1,314.22 an ounce, the highest level since May, and was at $1,313.80 at 11 a.m. in Singapore. The precious metal is up 2.4 percent this year and is heading for a fourth straight monthly gain, while a gauge of the U.S. dollar is down for a third month.
The precious metal is seeing renewed interest as a store of value as investors weigh prospects of fewer U.S. rate hikes this year and track signs of slower global growth amid the U.S.-China trade war. Bloomberg Economics’ early indicator showed China’s economy slowed further in January, while companies like Apple Inc (NASDAQ:AAPL). and Caterpillar Inc (NYSE:CAT)., are feeling the pain. The delay of U.S. government data after the partial shutdown, as well as the negotiations over Britain’s Brexit deal, have also added to uncertainty in financial markets.
While the two largest economies are holding talks this week aimed at finding a solution to the trade war, the U.S.’s criminal charges against China’s Huawei Technologies Co. have fueled tensions. That lessens the prospects of any major deal, according to John Sharma, an economist at National Australia Bank Ltd.
‘Provide Support’
“Moreover, with easing economic activity, the possibility of further rate hikes remains less assured than it was in 2018, which will likely provide support to gold,” Sharma said in an email. “Investors are likely to follow Powell’s comments on the outlook for the economy and, by extension, the likelihood, or not, of future rate rises.”
While the Fed hiked four times last year, officials have indicated a willingness to be patient and flexible in their approach to additional increases. The latest Bloomberg survey of economists showed respondents pushed back the timing of expected hikes in 2019, but not the number, sticking with a forecast for two moves. A majority said they now expect those to come in June and December, instead of March and September, as predicted in a similar survey a month ago.
Powell will step up the Fed’s communication efforts this year, with plans to hold a press conference to explain the bank’s stance after all eight policy meetings. That’s twice the number held in 2018.
Investor sentiment in gold remains strong, with holdings in bullion-backed exchange traded funds at the highest since April 2013 after about 61 metric tons were added this year.
In other precious metals, silver traded near the highest since July, platinum added 0.2 percent and palladium was little changed.
