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Gold rises after Yellen hints at only gradual tightening

Reuters  |  BENGALURU 

By Nithin ThomasPrasad

(Reuters) - Gold prices rose on Thursday after U.S. Federal Reserve Chair Janet Yellen said the central would only gradually tighten monetary policy, curbing speculation that would rise more than once this year.

Spot gold rose 0.3 percent to $1,223.11 per ounce at 0351 GMT. U.S. gold futures for August delivery rose 0.3 percent to $1,222.60 per ounce.

The U.S. economy is healthy enough for the Fed to raise rates and begin winding down its massive bond portfolio, although low inflation and a low neutral rate may leave the central with diminished leeway, Yellen said on Wednesday.

The dollar slipped as Yellen's comments sparked a significant decline in U.S. Treasury yields.

"A weaker dollar and falling rates could be helpful for the metal, but continued strength in U.S equities remain a drag," said INTL FCStone analyst Edward Meir.

Lower yields reduce the opportunity cost of holding non-yielding gold, while a weaker dollar makes bullion cheaper for non-U.S. investors. Higher would push yields up and likely boost the dollar.

"Gold's fate in the short term will undoubtedly be decided on Friday now by the U.S. CPI data which is indeed shaping up to be a major driver for the big Dollar, equities and bonds as well," said Jeffrey Halley, senior market analyst at OANDA.

Spot gold may revisit its July 10 low of $1,204.45 per ounce, as its bounce from this level could have completed, according to Technical analysts, Wang Tao.

Among other metals, silver rose 0.4 percent to $15.94 per ounce.

Palladium fell 0.1 percent to $862.85 per ounce. Platinum rose 0.3 percent to $918.90 per ounce, adding to a 1.7 percent gain in the previous session, its biggest since June 2.

(Reporting by Nithin Prasad and Arpan Varghese in Bengaluru; Editing by Richard Pullin)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, July 13 2017. 09:51 IST