Gold price rises by $50

Although Fed officials agreed that the state of the US economy should warrant a lift-off of the interest rates, they believed that it was a risky move in the context of a lagging inflation and a weak world economy.

Investors have been weighing the prospects of a September Fed interest-rate hike.

Having hit as high as $1,168.40 an ounce earlier in the session, spot gold eased 0.2% to $1,150 an ounce at 0954 GMT.

Those who began singing the swan song for gold around four weeks ago are doubtless rubbing their eyes in amazement now, for gold has meanwhile gained by almost $100 as compared with its end of July 5½-year low. People are expecting that prices will fall further.

The latest surge of gold buying came amid mounting worries about China’s economic health, as an early gauge of factory activity fell to its lowest level in more than six years.

On Friday, the Shanghai Composite Index SHCOMP, -4.27% fell 1.7% to 3,602.62 and the smaller Shenzhen Composite 399106, -5.39% fell 2% to 2,210.61.

Gold was on an upswing again with the precious metal’s prices surgingto a three-month high on Saturday.

Already unnerved following Thursday’s freefall for U.S. stocks, equity markets overseas unraveled even more last night after China’s Caixin manufacturing purchasing managers’ index shrunk to a 47.1 reading in August. During times of heightened risk, investor demand for the gold tends to spike.

“We continue to see high off-take of 250 gram and 500 gram bars, and pre-orders coming in”, said Padraig J. Seif, chief executive of Fine Metal Asia, a Hong Kong-based bullion supplier, referring to gold bars normally bought by investors rather than bulk consumers such as jewelry retailers. The recently signed deal on Iran’s nuclear program loosened sanctions on that country’s oil shipments, which will help keep prices low, Orengo said. Industrial metals also were floundering amid lower global growth expectations.

Chicago: Gold futures on the COMEX division of the New York Mercantile Exchange rose ahead of the release of the minutes from a US Federal Reserve meeting.