Gold is back to gains on Wednesday as investors in the precious metal react to the dovish tone struck by US Federal Reserve Chairman Janet Yellen in a speech late on Tuesday.
At around 8:45 a.m. GMT (3:45 a.m ET) the metal is trading at $1,244.9, up nearly 0.6% on the day, extending gains seen on Tuesday, when it jumped by almost 2%, pushed higher by a cautious speech from Yellen. Here’s how that looks:
Speaking to the Economic Club of New York on Tuesday, Yellen said that the Fed being cautious when it comes to raising rates is “especially warranted” and re-emphasised her belief that rates will increase more slowly than previously expected this year.
Investors in gold took Yellen’s comments as being good news for bullion, and started pouring money into the metal as she spoke. Here’s what HSBC’s Chief Precious Metals analyst James Steel had to say after the speech (emphasis ours):
Gold began moving higher well ahead of Fed Chair Yellen’s speech in New York. Gold was aided by a lower USD and US bond yields. Gold has shown itself to be highly sensitive to US monetary policy and though bullion rose ahead of Janet Yellen’s remarks, the main buying came as the market digested her comments and interpreted them bullishly.
In the first quarter of 2016, the price of gold has gained more than 15%, hitting a high of $1,272 per ounce in mid-March. It has since pared some of those gains, but is still trading well above the $1,200 mark, and at levels not seen since early 2015.