New York - Gold advanced for the third straight session after a report showed factory production in the US rose less than forecast last month, reviving prospects for an extension of economic stimulus by the Federal Reserve.
Output at factories rose 0.1 percent in September, figures from the Fed showed today, compared with the median forecast of a 0.3 percent gain in a Bloomberg survey of economists.
The Fed starts its two-day meeting tomorrow. The 16-day US government shutdown probably trimmed 0.25 percentage point from fourth-quarter economic growth and cost 120,000 jobs this month, according to Jason Furman, head of the president’s Council of Economic Advisers.
“The market expects the Fed to postpone tapering for a few months at least,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview.
Gold futures for December delivery gained 0.4 percent to $1,358.40 an ounce at 10:52 a.m. on the Comex in New York.
Prices earlier fell as much as 0.5 percent.
Trading was 45 percent below the 100-day average for this time of day, data compiled by Bloomberg showed.
Gold, down 19 percent this year through October 25, is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation the Fed will slow its $85 billion in monthly debt purchases as the economy strengthens.
“With the recent shutdown, fiscal brinkmanship and modest employment numbers, there is little reason to taper,” Suki Cooper, an analyst at Barclays Plc in New York, wrote in a report today.
“Prices lack support from the physical market for sustained gains.”
Russia’s central bank sold gold for the first time in a year.
Its reserves fell about 0.37 metric ton to 1,015.1 tons in September, data on the International Monetary Fund’s website showed.
Mexico reduced reserves for a 17th straight month, while Kazakhstan expanded assets for a 12th successive month, the data showed.
Silver futures for December delivery lost 0.1 percent to $22.61 an ounce on the Comex. - Bloomberg News