Gold climbs as Fed signals no rush to raise rates

London (Feb 25)  Gold rose on Wednesday, recovering from the previous day's seven-week lows, after comments from Federal Reserve Chair Janet Yellen suggested the central bank would not be rushed into raising interest rates.

That weighed on the dollar, supporting gold. The precious metal rose more than 1 percent to a session high earlier in Asia
after Chinese buyers returned from the Lunar New Year holiday, driving premiums higher on the Shanghai Gold Exchange.

Spot gold was at $1,207.30 at GMT, up 0.6 percent, after earlier peaking at $1,211.80 an ounce. U.S. gold futures for April delivery were up $9.70 an ounce at $1,207.00.

The dollar fell after Yellen held back on Tuesday from
giving a clear view on when the Fed will begin hiking rates,
sparking a rally in precious metals on Wednesday that pushed
silver up more than 3 percent and palladium to a six-week high.
 
    Gains in gold are likely to be limited, however, by
expectations that rates remain on track to rise. That would lift
the opportunity cost of holding non-yielding bullion, while
pressuring the dollar, in which the metal is priced.
    Natixis analyst Bernard Dahdah said he still expects the Fed
to hike rates in June. "I don't think (what Yellen said) was as
clear cut as saying, we're not going to have an interest rate
rise any time soon," he said. "That's probably why the price of
gold is up, but it's still in the range it was."
    Yellen said on Tuesday that while the Fed is preparing to
consider rate hikes on a "meeting-by-meeting basis", an increase
is not likely for at least the next couple of meetings. She is
likely to take the same stance when she testifies before the
House Financial Services Committee on Wednesday.
    In China, premiums on the Shanghai Gold Exchange rose to
$5-$6 an ounce over global spot prices from $3-$4 before the New
Year break began on Feb. 18, reflecting firm demand from the
world's No. 2 gold consumer.
    "China returned from their Lunar New Year holidays today and
we saw strength across the board for the precious metals," MKS
said in a note. "Good demand (was) evident throughout the entire
first session after the week-long break."
    Silver was up 1.5 percent at $16.46 an ounce. Spot
platinum was up 0.7 percent at $1,168.95 an ounce, while
spot palladium was up 1.3 percent at $801.05 an ounce,
off a six-week high of $804.10 hit earlier in the session.

Source: Reuters