Investing.com -- Gold soared more than $15 an ounce, bouncing off one-month lows from the previous session, as Janet Yellen emphasized that the Federal Reserve should proceed gradually with the timing of its next interest rate hike.
On the Comex division, gold for June delivery traded between $1,217.00 and $1,242.00, before closing at $1,237, up $15 or 1.23% on the session. Despite retreating from one-year highs earlier this month, gold is still up nearly 15% since the start of the year and is on pace for its strongest opening quarter since 2007. More broadly, the precious metal is up nearly $250 an ounce since falling to six and a half year lows in early December.
Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,280.70, the high from Mar. 11.
Citing increased risks with global financial and economic conditions, as well as longstanding concerns with the price of oil, Yellen reiterated that only gradual increases in the Fed's benchmark Federal Funds Rate should be warranted in the coming years. The Federal Open Market Committee has held the Fed Funds Rate at a targeted range between 0.25 and 0.50% for each of the last two meetings since abandoning a seven-year zero interest rate policy in December.
"Implicitly, this expectation of fading headwinds and a rising neutral rate is a key reason for the FOMC's assessment that gradual increases in the federal funds rate over time will likely be appropriate," Yellen said at a speech before The Economic Club of New York. "That said, this assessment is only a forecast. The future path of the federal funds rate is necessarily uncertain because economic activity and inflation will likely evolve in unexpected ways. Reflecting global economic and financial developments since December, however, the pace of rate increases is now expected to be somewhat slower."
While Yellen noted that the domestic economy has displayed remarkable resiliency as the labor market shows improvement, she emphasized that a slowing global economy continues to spillover into the U.S. In particular, Yellen indicated that the FOMC is concerned with slowing manufacturing and export levels amid a weak economic outlook in China.
"There is a consensus that China's economy will slow in the coming years as it transitions away from investment toward consumption and from exports toward domestic sources of growth," Yellen said. "There is much uncertainty, however, about how smoothly this transition will proceed and about the policy framework in place to manage any financial disruptions that might accompany it. These uncertainties were heightened by market confusion earlier this year over China's exchange rate policy."
Yellen's comments also contradict a wave of hawkish remarks from several of her colleagues last week, who argued that the Fed should implement multiple rate hikes before the end of the year amid rising inflation and sharp declines in the dollar. Last week in an unexpected development, St. Louis Fed president James Bullard, Philadelphia Fed president Patrick Harker and San Francisco Fed president John Williams all supported further tightening measures from the U.S. central bank in the coming months.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.85% to an intraday low of 95.08 before settling at 95.18. The index is down by more than 1% over the last month of trading.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for May delivery added 0.045 or 0.30% to 15.235 an ounce.
Copper for May delivery lost 0.038 or 1.69% to 2.208 a pound.