Gold rose from the lowest in a week as the dollar declined, boosting demand for the precious metal as an alternative investment.
The dollar dropped for the first time in four days against a basket of currencies as an Ebola diagnosis in New York crimped risk appetite. Gold slumped 8.4 percent last quarter as the greenback posted the biggest jump since 2008 and equities surged to a record. Global holdings in exchange-traded funds backed by the metal dropped to a five-year low on Oct. 22.
Bullion rebounded from the year’s low reached on Oct. 6 after the Federal Reserve cited slowing overseas economies as a risk to U.S. expansion. Those concerns prompted traders to push back estimates for an increase in interest rates by the Fed. Treasuries rose as the Ebola case highlighted concern that spread of the virus threatens the global economy further.
“Today’s upward move is all about dollar reacting to Ebola fears in New York,” Tom Power, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “The long-term price direction will be all about what the Fed does next.”
Gold futures for December delivery added 0.1 percent to $1,230.80 an ounce at 11:34 a.m. on the Comex in New York. Prices reached $1,226.30 yesterday, the lowest since Oct. 15, and are down 0.6 percent this week. Trading was 25 percent below the average for the past 100 days for this time, data compiled by Bloomberg show.
Fed policy makers are scheduled to meet on Oct. 28-29.
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