Also on Tuesday, Minneapolis Fed President Neel Kashkari said interest-rate increases over the past 18 months may be “ doing real harm” to the U.S. economy, which would help explain why inflation is low and job growth has slowed. While U.S. unemployment of 4.4 percent last month was only slightly above the 16-year low set the month before, inflation has remained beneath the Fed’s 2 percent target for most of the last five years.
Congressional investigations of Russian meddling in the U.S. election and worries that Hurricane Irma could destroy properties in Florida are also clouding the U.S. outlook. Those concerns have helped weaken the dollar and boost haven demand for bullion.
The Bloomberg Dollar Spot Index fell for a fifth straight session, on course for the lowest close since January 2015, helping boost gold’s appeal as an alternative investment.
Concerns about U.S. political turmoil are mounting at a time of growing friction between the U.S. and North Korea. South Korean President Moon Jae-in warned Wednesday of an “ uncontrollable situation” that could emerge unless North Korea’s provocations are stopped now.
Spot gold has rallied about 16 percent this year, and its 60-day historical volatility hovered near the lowest since 2005.
“Some of the larger investors are just starting to come back to this asset class,” Arnaud du Plessis, a fund manager at CPR Asset Management SA, said in a telephone interview from Paris. “Many of them were scared off by volatility last year, and are only returning now, with volatility low and prices constructive.”
This article was provided by Bloomberg News.