Gold hits nine-week high

A customer points at gold bars for sale in a gold store in the Grand Bazaar covered market in the Sultanahmet district of Istanbul, Turkey. Gold prices have surged Kostas Tsironis/Bloomberg

Gold futures extended gains to a nine-week high after a report showed US consumer prices rose less than expected, weakening the case for the Federal Reserve to raise interest rates.

Bullion futures for December delivery rose 0.3 pe rcent to settle at US$1,294 an ounce at 1:48pm on the Comex in New York. That's the highest close for a most active contract since June 6. It earlier added as much as 0.6 percent to $1,298.10. The metal climbed 2.3 per cent last week, posting the fourth weekly gain in five.

The U.S. consumer-price index rose 0.1 per cent in July, a labour department report showed Friday, trailing the 0.2 per cent median estimate of economists surveyed by Bloomberg. A more sustained ebb in price pressures could make it tougher for the central bank to stay on course for one more rate increase this year. Low rates boost the appeal of gold, which doesn’t pay interest.

With the CPI data,“traders are thinking there will be no interest rate hike this year,” said Naeem Aslam, chief market analyst at Think Markets UK in London. “This doesn’t help the Fed’s situation. It helps the doves who want the Fed to go slow.”