SINGAPORE (Reuters) - Gold climbed more than 1 percent to its highest in 8-1/2 months on Thursday after Federal Reserve Chair Janet Yellen stressed that U.S. interest rates would rise gradually.
The Fed is unlikely to reverse its plan to raise interest rates further this year, but tighter credit markets, volatile financial markets, and uncertainty over Chinese economic growth have raised risks to the U.S. economy, Yellen told U.S. lawmakers on Wednesday.
A slowing of rate hikes could help bullion, keeping down the opportunity cost to hold it.
Spot gold jumped to $1,213 an ounce, its highest since May 22, before paring gains to trade up 0.9 percent at $1,208.27 by 0059 GMT.
U.S. gold rose to $1,215.30, a near-nine-month peak.
"Yellen made it clear that while the Fed still expects to continue on its gradual tightening path, policy was not on a pre-set course and would respond appropriately to developments," ANZ analysts said in a note, adding that gold prices will likely get some support from the dovish Fed outlook.
Bullion was also supported by safe-haven demand. Asian shares sputtered on Thursday as Yellen's tone of guarded optimism led to an indecisive finish for Wall Street.
Her comments also hurt the dollar, which fell to its lowest since October against a basket of major currencies.
Very interesting Cowichan, but will the Commissioners & SCC understand this is related to their decision on Law 32 or even care, I imagine most of them are isolated from the difficulties that the ordinary Egyptian suffers, rather like our politicians!
temporarily suspended as US dollars are in short supply - http://www.reuters.com/article/us-gm-egypt-idUSKCN0VH1YZ Egypt needs foreign trade dollars or they will spiral downwards - makes me think Law 32 is more essential than not as all companies will eventually feel the pinch, especially as supply chains are affected
Interesting video over on Bloomberg covering Yellens presentation In essence, Mr McHenry, a Vice-Chairman of the Financial Services Committee, asks her if the Fed has the legal authority to implement negative-interest rates. - Apparently, doubts were raised in a 2010 memo to the Fed questioning the 'Legal Authority' to implement aa neg-rates interest policy. - It's worth watching her attempts at answering the question.
Interesting though that the question is not about raising rates but rather following Europe in the opposite direction.
I'd be interested in posters perception of Yellen's demeanour in her attempts to answer the question.
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