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1st LD Writethru: Gold up on U.S. Fed Chair Yellen's comments

Xinhua, March 30, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose Tuesday as U.S. Federal Reserve Chairwoman Janet Yellen signaled a cautious approach to monetary policy.

The most active gold contract for April delivery rose 15.7 U.S. dollars, or 1.29 percent, to settle at 1,235.80 dollars per ounce.

The precious metal was given support as U.S. Federal Reserve Chairwoman Janet Yellen gave a speech to the Economics Club of New York Tuesday, indicating that she believed the Fed would be cautious with the timing of interest rate increases. Ever since the March meeting of the Federal Open Market Committee (FOMC), traders believe that the Fed may raise rates from 0.50 to 0.75 during the June FOMC meeting. According to the CMEGroup's Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 7 percent at the April 2016 meeting, and 28 percent at the June 2016 meeting.

Gold was given further support as the U.S. Dollar Index fell by 0.78 to 95.22 as of 1900 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

Analysts say as the U.S. economy begins to recover, banks become more willing to take risks in a bullish economy, and as a result could potentially release some of their excessive reserves, flooding the economy with cash and causing inflation. The goal of the Fed is to soak up some of the banks' 2.5 trillion U.S. dollars of excess reserves.

The precious metal was prevented from rising further as a report released Tuesday by the New York-based Conference Board shows consumer confidence increasing by 2.2 points to 96.2 in March. Analysts note that the jobs component is still showing strength, which could imply a strong monthly jobs report, which is due on Friday.

Silver for May delivery rose 4.3 cents, or 0.28 percent, to close at 15.233 dollars per ounce. Platinum for April delivery added 20.5 dollars, or 2.17 percent, to close at 965.20 dollars per ounce. Endite