(Bloomberg) -- Gold extended gains to its highest level since May while copper advanced as the latest comments from Federal Reserve officials bolstered bets the US central bank will start cutting interest rates next year.
Governor Christopher Waller, one of the most hawkish Fed officials, said policy is well positioned to return inflation to the central bank’s 2% goal, suggesting policymakers may not need to raise rates again. Governor Michelle Bowman said she remains willing to support rate hikes if inflation progress stalls, but stopped short of endorsing an increase next month.
Treasury yields and the dollar extended declines, helping boost bullion to as much as $2,043.04 an ounce, the highest intraday since May 10. Copper traded on the London Metal Exchange rose as much as 1.4%.
Investors will focus on US economic data this week, including the Fed’s preferred measure of underlying inflation, for further clues on interest rates.
The outlook on the Fed’s next steps has seen hedge funds boost net bullish bets on gold to the highest in almost four months, the latest CFTC data on futures and options show. Meanwhile, holdings in exchange-traded funds have stabilized after months of outflows.
Shares of gold producers rose, with Newmont Corp. advancing 6.3%, Anglogold Ashanti Plc gaining 8.2% and Barrick Gold Corp. advancing 5%. Spot silver rose above $25 an ounce for the first time since August.
Copper’s advance also was aided by news that Panama’s top court ruled against a law approving a contract with First Quantum Minerals Ltd., throwing into doubt the future of one of the world’s biggest copper operations. The spread between the copper cash contract and that of the three-month futures tightened.
Spot gold added 1.3% to $2,040.55 an ounce as of 4:37 p.m. in New York. Copper traded on the LME climbed 1.3% to settle at $8,473.00 a metric ton.
--With assistance from Swansy Afonso, Eddie Spence and Sybilla Gross.
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