Gold prices climbed the most since January as Federal Reserve officials said an increase for interest rates is unlikely next month and cut their outlook for borrowing costs.
U.S. economic growth has “moderated somewhat” and inflation has declined further below where officials would like it, the Federal Open Market Committee said in a statement Wednesday. The policy makers lowered their median estimate for the federal funds rate at the end of 2015 to 0.625 percent, compared with 1.125 percent in December forecasts.
In 2015, gold prices fell 1.4 percent on concern that rates would rise, cutting the appeal of the metal, which generally offers returns through price gains. The benchmark rate has been near zero since 2008.
Gold for immediate delivery climbed 1.6 percent to settle at $1,167.61 an ounce, the biggest gain since Jan. 30.
Investors had exited gold in anticipation of a nearby increase for borrowing costs, which lifts the appeal of assets with better yield prospects such as bonds and equities. About $4 billion has been wiped from the value of exchange traded funds backed by bullion in March, heading for the biggest monthly drop since September.
Source : Bloomberg