Gold Little Changed on Speculation Fed to Cut Interest Rates

By Claire Leow and Glenys Sim

Nov. 27 (Bloomberg) -- Gold traded little changed in Asia on speculation the Federation Reserve will cut interest rates next month, driving a decline in the dollar and increasing the appeal of the precious metal as an alternative investment.

The U.S. Federal Reserve meets on Dec. 16 and may cut key lending rates to 0.75 percent from 1 percent, according to the median of 69 estimates in a Bloomberg survey. Asian stocks rose for a third day after China, the world’s second-largest gold consumer behind India, lowered interest rates by the most in 11 years to spur growth.

“Continued solid economic growth in China is likely to help sustain jewelry gold demand,” David Moore, chief commodity strategist at Commonwealth Bank of Australia, said in a weekly report today.

Gold for immediate delivery was little changed at $812.67 an ounce at 3:35 p.m. in Singapore. Silver for immediate delivery fell 0.6 percent to $10.25.

Gold may range between $800 and $820 today and tomorrow on thin trading because of the U.S. Thanksgiving holiday, Ronald Leung, director, Lee Cheong Gold Dealers (Hong Kong) Ltd., said by phone from Hong Kong. Most markets in the U.S. are closed today for the national holiday.

China lowered its key lending rate yesterday less than three weeks after unveiling a 4 trillion yuan ($586 billion) stimulus plan. The key one-year lending rate will drop 108 basis points to 5.58 percent, effective today, the People’s Bank of China said.

Gold demand in China rose 18 percent in the third quarter of this year, the World Gold Council said Nov. 19. Demand increased by 29 percent in India and by 15 percent in the Middle East.

Gold for February delivery climbed 0.3 percent to $813.90 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 3:25 p.m. in Singapore. Gold for October delivery in Tokyo rose 0.5 percent to 2,477 yen a gram ($809 ounce).

To contact the reporter on this story: Claire Leow in Singapore at at cleow@bloomberg.net;