July 9 (Bloomberg) -- Gold rose to a one-week high after several Federal Reserve policy members expressed concern that investors may be growing too complacent on the economic outlook, boosting demand for the metal as a haven.
“Signs of increased risk-taking were viewed by some participants as an indication that market participants were not factoring in sufficient uncertainty about the path of the economy and monetary policy,” the minutes of the last Federal Open Market Committee meeting showed today.
Gold has climbed 11 percent this year, partly on speculation that a faltering economic recovery would spur the Fed to keep borrowing costs close to zero percent. The dollar headed for the third straight drop against a basket of major currencies, erasing earlier gains and increasing the metal’s appeal as an alternative asset.
“Investors are responding to the statement that indicates that concerns about the economy remain,” Charlie Bilello, director of research who helps oversee $220 million of assets at New York-based Pension Partners LLC, said in a telephone interview.
Gold for immediate delivery rose 0.9 percent to $1,331.24 an ounce at 3:24 p.m. New York time. Earlier, the price reached $1,332.20, the highest since July 1.
On the Comex in New York, gold futures for August delivery settled 0.6 percent higher at $1,324.30 at 1:35 p.m. In electronic trading after the close, volume was 38 percent above the average for the past 100 days, according to data compiled by Bloomberg.
The minutes showed that Fed officials agreed that their bond purchases would end with a final reduction of $15 billion at the October meeting if the economy progresses as they expect.
“The announcement that the stimulus will end in October was a given, so you did not see any negative reaction in the market,” Bilello said.
The Fed said last month that interest rates will stay low for a “considerable time,” boosting demand for the metal as an inflation hedge.
European Central Bank President Mario Draghi affirmed that monetary policy will be “accommodative for an extended period of time.” He spoke in London at 2:30 p.m. New York time, after the release of the Fed minutes.
Draghi’s remarks also bolstered gold, Bilello of Pension Partners said.
The metal slumped 28 percent in 2013, ending a 12-year rally, amid concern that the Fed would taper the pace of monetary stimulus. Gold jumped 70 percent from December 2008 to June 2011 as the central bank bought debt and cut interest rates to a record in a bid to boost the economy.
The Fed trimmed monthly asset purchases to $35 billion after five straight cuts of $10 billion each since November.
--With assistance from Jeff Kearns in Washington.