Investing.com – Gold prices moved off six-week lows, after the dollar fell to a seven-month low against rivals but gains were capped as Fed chair Janet Yellen reiterated the need to raised rate “very gradually”.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange rose by $4.18, or 0.34%, to $1,250.68 a troy ounce.
The dollar fell sharply, boosting demand for the precious metal, as traders digested comments from Fed chair Janet.
Fed chair Janet Yellen offered relatively little on monetary policy but reiterated that it was appropriate to raise interest rates “very gradually to a level that [is] likely to remain quite low by historical standards for a long time”.
Yellen noted that inflation expectations “has continued to run below our [the fed’s] objective”, asserting that the central bank wanted to avoid a scenario in which inflation expectations continued to slip.
Yellen speech came ahead of comments from Philadelphia Fed President Patrick Harker, who downplayed the recent dip in inflation as transitory and remained adamant that the Federal Reserve is on the right path concerning monetary policy.
In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.
Elsewhere, upbeat consumer confidence data had muted effect on gold futures, despite expectations for consumer confidence to drop it rose to 118.9 in June, The Conference Board announced Tuesday.
The slump in the dollar boosted commodity prices across the board, as silver futures gained 0.45% to $16.464, a troy ounce while platinum futures rose by 0.25% to $920.50.
Copper added 0.74% to $2.657, while natural gas, gained 0.33% to $3.059.