Investing.com – Gold turned positive Tuesday, after Federal Reserve Governor Lael Brainard sparked doubts about a rate hike later this year, warning that further rate increases could stifle inflation.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange rose by $2.45, or 0.20%, to $1,215.72 a troy ounce.
Brainard’s dovish comments dampened investor expectations of a Fed rate hike later this year, pressuring yields and the dollar, lifting demand for the precious metal.
“I will want to monitor inflation developments carefully, and to move cautiously on further increases in the federal funds rate, so as to help guide inflation back up around our symmetric target." Federal Reserve Governor Lael Brainard said Tuesday.
Brainard also suggested that the Fed would unwind its balance sheet “soon” as long as economic growth remained robust.
The U.S. dollar index fell to session lows against its rivals while the U.S. 10-year dipped to 2.362, down 0.37%.
Gold is sensitive to moves in both bond yields and the U.S. dollar – A weaker dollar makes gold cheaper for holders of foreign currency while a dip in U.S. rates, decreases the opportunity cost of holding non-yielding assets such as bullion.
The upside in gold futures, however, remained capped, as investors look ahead to
testimony from Fed chair Janet Yellen on the state of the U.S. economy and the Fed’s monetary policy outlook.
Yellen is scheduled to testify on the economy before the Senate Banking Committee at 10:00AM ET (14:00GMT) Wednesday. On Thursday, she will appear in front the House Financial Services Committee also at 10:00AM ET.
Other precious capitalised on dollar weaknesses, with silver futures adding 0.95% to trade at $15.777 a troy ounce while platinum futures traded flat at $901.15.
Copper traded at $2.673, up 0.96%, while natural gas, rose by 3.96% to $3.045.