Gold Futures Gain as Yellen Signals Rate Increase Isn’t Imminent

Gold futures rebounded from a seven-week low after Federal Reserve Chair Janet Yellen signaled an interest-rate increase isn’t imminent. Palladium climbed to the highest in almost six weeks.

Yellen, testifying to the Senate Banking Committee on Tuesday, indicated that a change in the Fed’s guidance on borrowing costs won’t lock the central bank into a timetable. Higher interest rates curb gold’s appeal because the metal generally gives returns only through price gains.

Gold has increased 1.5 percent this year as signs of an economic slowdown in China and turmoil over Greece’s debt boosted demand for haven assets. While the U.S. labor market is improving, inflation is below the Fed’s goal and wage growth is “sluggish,” Yellen said Tuesday. She testified in the House of Representatives Wednesday.

“Today’s rally is a relief that we’re not in imminent danger for a rate increase, according to Yellen yesterday,” George Gero, a precious-metals strategist at RBC Capital Markets in New York, said in a telephone interview.

Gold futures for April delivery rose 0.4 percent to settle at $1,201.50 an ounce at 1:47 p.m. on the Comex in New York. The metal fell to $1,190 on Tuesday, the lowest since Jan. 5, before paring losses after Yellen spoke to Congress.

“Markets in Asia and Europe on Wednesday further digested” Yellen’s testimony, Jim Wyckoff, a senior analyst at Kitco Metals Inc., a research company in Montreal, said in a report. “Elements of her remarks favored both the monetary policy hawks and doves.”

Exchange-Traded Products

Futures trading was 37 percent below the average for the past 100 days for this time, according to data compiled by Bloomberg. Global holdings in exchange-traded products backed by bullion increased Tuesday to 1,679.8 metric tons, the fifth straight gain and highest since October.

Prices may get a boost from buyers in China, who returned from a week-long holiday on Wednesday, Howie Lee, an investment analyst at Phillip Futures Pte, wrote in a note.

Silver futures for May delivery gained 1.5 percent to $16.474 an ounce on the Comex.

On the New York Mercantile Exchange, palladium for June delivery advanced 2.2 percent to $809.30 an ounce, after touching $810, the highest since Jan. 14.

Platinum futures for April delivery climbed 0.5 percent to $1,168.80 an ounce, the first gain in four sessions.

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