Gold futures climbed as a slump in orders for U.S. durable goods signaled that weaker foreign economies are weighing on American expansion, boosting demand for haven assets.
Demand for all durable goods — items meant to last at least three years — declined 3.4 percent, the worst performance since August, the Commerce Department said Tuesday. Slowing expansion may prompt the Federal Reserve to hold off on raising interest rates. Policy makers will meet this week.
“That durable goods number was notably weak with lower revisions, so at the margin it pushes the first Fed rate hike further out in time,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp., said in a telephone interview. “Pushing the rate hike back tends to be bullish for other assets including gold, which is dollar denominated.”
The metal is up more than 8 percent this year as stagnating economies challenge policy makers to generate new ways to buoy growth. The euro traded near an 11-year low against the dollar after the European Central Bank last week expanded its bond-buying program to include government bonds, boosting demand for gold as an alternative to currencies that are being revalued.
Gold futures for April delivery rose 0.6 percent to $1,287.80 an ounce at 9:20 a.m. on the Comex in New York. Prices climbed in the previous three weeks.