Investing.com — Gold futures posted one of its strongest gains for the year on Wednesday, rallying in late-afternoon trading as the U.S. dollar weakened following comments from Federal Reserve chair Janet Yellen.
While Ms. Yellen indicated that its benchmark Federal Funds Rate could be increased later this year, she emphasized that it will not occur until after the Federal Open Market Committee’s next meeting in April, at the earliest. Yellen added that the timing of the decision will be “data dependent,” and that a rate hike will not necessarily be made in June.
Despite removing references of remaining patient from the Fed’s monetary policy stance, Yellen struck a dovish tone at times with forecasts for weaker inflation and GDP growth, as well as lower long-term interest rate increases.
Gold struggles to compete with yield-bearing assets in periods of raising interest rates.
On the Comex division of the New York Mercantile Exchange, gold prices for April deliveries rose $16.20 or 1.41% to $1,167.50 a troy ounce. At one point on Wednesday following Yellen’s comments, gold futures were up by more than $20 on the day. Last week, gold prices dipped to around 1,150 an ounce.
Yellen’s comments sent the U.S. dollar spiraling against the euro, as it fell more than 2.50% to 1.0875. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, also plunged to 96.75 at the market’s close. The index reached 99.68 minutes before Yellen’s statement was released.
A stronger dollar also weighs on gold, which is denominated in dollars for foreign purchasers of the precious metal.
Elsewhere, Silver fell 0.037 to 15.529 while Copper dropped 0.0585 to 2.5750. At one point, Copper reached a three-week low at 2.5585.
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