Gold may rise for a third week on speculation the Federal Reserve will keep interest rates unchanged for the rest of this year as the U.S. economy slows, eroding the value of the dollar.

Fifteen of 25 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Oct. 19 and Oct. 20 advised buying gold, which rose 0.6 percent last week to $596.40 an ounce. Two respondents said to sell gold and eight were neutral.

The Fed halted two years of rate increases on June 29 and probably will leave them unchanged at an Oct. 25 meeting, according to a separate survey of economists. Higher loan costs intended to combat inflation have slowed home buying and fueled gold's 19 percent drop from a 26-year high in May. Lower interest rates may reduce the value of the dollar and enhance the appeal of gold as an alternative investment.

``The Fed doesn't want to set off some sort of vicious cycle in which weakness in housing causes weakness in consumer spending,'' said Stephen Leeb of Leeb Capital Management, which overseas $145 million in New York, including gold stocks. ``Over the long haul, the dollar is going to go down. The winner here is going to be gold.''

Gold futures for December delivery rose $3.70 an ounce on the Comex division of the New York Mercantile Exchange, as predicted by a majority of analysts surveyed on Oct. 12 and Oct. 13. The Bloomberg survey has forecast prices accurately in 78 of 130 weeks, or 60 percent of the time.

Home Sales Fall

The National Association of Realtors probably will say this week sales of existing homes in the U.S. fell last month to an annual rate of 6.21 million from 6.3 million in August, according to the average forecast of 51 economists surveyed by Bloomberg. Prices of existing homes dropped in August for the first time in 11 years, and sales were the lowest since 2004.

U.S. new-house prices will decline this year for the first time since the 1991 recession as a glut of properties forces builders to offer discounts, the realtor trade group said this month.

``We are watching housing data very closely,'' said John Licata, chief investment strategist at Blue Phoenix Inc., an energy and precious-metals consultant in New York. The U.S. economy is ``growing at a slower pace,'' said Licata, who expects gold to reach $800 in 2007. ``I don't think the Fed is going to do anything to shock investors throughout the remainder of 2006.''

The Commerce Department on Oct. 27 probably will say that the U.S. economy slowed to a 2 percent growth in the third quarter from 2.6 percent in the second quarter, according to the average of 65 economists surveyed by Bloomberg News.

Slowing Economy

The Fed will have to cut interest rates by July, Caterpillar Inc., the world's largest maker of earthmoving equipment, said last week. Caterpillar, based in Peoria, Illinois, said Oct. 20 that sales will weaken next year as the economy loses steam. The forecast sparked a 15 percent drop in the company's shares, the most in 19 years.

Caterpillar, a bellwether of the U.S. economy, predicted decreases in U.S. housing starts to about 1.75 million units in 2007 and a rate cut by the Fed of 50 to 100 basis points in the first half of 2007. The current rate is 5.25 percent.

``I'm betting gold moves higher from here'' as the dollar weakens, said Ralph Preston, an analyst at Heritage West Financial Inc., a futures brokerage in San Diego, California. ``Looks like the Federal Reserve will stay on hold with rates this coming week and that should be enough to embolden gold bulls to challenge the $612 area.''

Speculators

Investors continue to put money into gold bars and coins, even as speculators reduce their bets on a rally in futures prices.

In the third quarter, seven gold exchange-traded funds including the StreetTracks Gold Trust had a net inflow of 17.89 metric tons, worth about $358 million, the producer-funded World Gold Council said Oct. 18. This represents a 3.2 percent growth in volume terms and 2 percent in dollar terms.

This ``stands in stark contrast to the liquidation seen in the futures market,'' Katharine Pulvermacher, the managing director of investment research and marketing, and other analysts said in the report. It ``reflects a substantially different investor profile than that of the shorter term investors who have historically dominated the futures market.''

Hedge-fund managers and other large speculators reduced their net-long position in Comex gold futures in the week ended Oct. 17 to the lowest in more than a year, Commodity Futures Trading Commission data show. Speculative long positions, or bets that prices will rise, outnumbered short positions by 61,259 contracts, down 1.9 percent from a week earlier and 32 percent from July 5 to Oct. 3.