In the end, gold capped its first back-to-back gain in almost three weeks as investors reconsidered an initial hawkish reading of Federal Reserve Chair Janet Yellen’s speech.
Yellen called additional gradual interest-rate increases appropriate without specifying precise timing, sending gold prices swinging. Her comments, in a text prepared for a speech Monday, were less specific than previous remarks in describing when she thought the Fed should raise rates again. On May 27, she said an increase would likely be appropriate in “coming months.”
The odds of the Fed raising rates in July fell to about 24 percent Monday after Yellen’s remarks, less than half the level of a week ago, Fed funds futures show. Gold rallied the most since mid-March on Friday after a report showed the U.S. economy created the fewest jobs last month in almost six years, sending the dollar lower and boosting demand for the metal as a haven.
“She’s saying they’re going tighten at some point, but she very definitely stopped short of saying they’re going to do it in July,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said a telephone interview. “As far as the market is concerned, tightening is a risk, but she didn’t convince us that it’s going to happen imminently.”
Gold futures for August delivery added 0.4 percent to settle at $1,247.40 an ounce at 1:40 p.m. on the Comex in New York, extending Friday’s 2.5 percent advance. That takes this year’s gain to 18 percent.
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