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Gold rebounds after Yellen's rate comments

January 30, 2015

Frankfurt (Jan 30)  Gold prices were higher in Europe, as the market perked up after the Federal Reserve chair said it would be patient before raising interest rates.

Spot gold was trading at $US1,264.33 a troy ounce, up 0.6 per cent, in morning European trade -- up from the two-week low it hit in the previous session.

"Janet Yellen told the Democrats that there will be no rate increase immediately...Gold and silver recovered slightly," ADS Securities chief market strategist Nour Al-Hammoury said.

An interest rate rise would be good for the greenback and bad for gold, which is priced in dollars. When the dollar gains, the yellow metal becomes more expensive for other currency-holders to purchase -- meaning demand comes off and prices fall.

However, some hold a negative view of gold's long-term prospects.

"We have become more bearish again in the short term and maintain a longer-term bearish view on gold and silver against the backdrop of the progressing economic recovery,"  Julius Baer commodities research analyst Carsten Menke said.

Looking ahead, the US fourth-quarter GDP figures are due to be published later Friday. Commodity trader INTL FCStone said these "will likely be the next 'shoe to drop' as far as gold is concerned -- a subpar reading would be bullish for the precious metal, while a stronger number could not knock prices further as money again flows into US stocks and the dollar."

All the precious metals were in positive territory. Silver was up 0.5 per cent at $US17.011 an ounce, platinum was up 0.9 per cent at $US1,226.90 an ounce, and palladium was up 1.3 per cent at $US780.40 an ounce.

Source: BusinessSpectator

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