Gold futures rose to the highest in almost four weeks as concern that global economic growth is slowing spurred demand for a haven asset.
The metal advanced this month as Federal Reserve officials indicated a worldwide economic slowdown may delay U.S. interest-rate increases. Germany cut its growth outlook today, and investor confidence fell to the weakest in two years as recession concerns mount.
Holdings in exchange-traded products backed by gold rose yesterday by the most since July. On Oct. 10, the assets were at a five-year low. Prices climbed 2.4 percent last week, snapping five straight losses, as bets that record-low borrowing costs will persist fueled investor demand.
“The falling gold price might be a signal that global economic growth is slowing,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said in a telephone interview. “In such a scenario, you may be looking for gold as a safe haven.”
Gold futures for December delivery rose 0.3 percent to close at $1,234.30 an ounce at 1:47 p.m. on the Comex in New York. Earlier, the price reached $1,238.60, the highest for a most-active contract since Sept. 17.
Holdings in global ETPs rose by 3.7 metric tons yesterday to 1,666 tons, the first increase in two weeks, data compiled by Bloomberg show.
Gold dropped 5.9 percent last month as signs of an improving U.S. job market spurred speculation that the Fed was moving closer to increasing borrowing costs. Minutes from the central bank’s September meeting released last week highlighted growing concern that the strengthening dollar may hurt exports. The policy makers maintained a pledge to keep interest rates low for a “considerable time.”
Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value. The metal climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent, boosting inflation concerns.
Silver futures for December delivery rose 0.3 percent to $17.403 an ounce.
On the New York Mercantile Exchange, palladium futures for December delivery added 1.2 percent to $795.10 an ounce. Platinum futures for January delivery climbed 0.9 percent to $1,272.30 an ounce.