Gold Rises After Fed's Patience to Linger
02/26/2015 7:00 am EST
OANDA senior currency strategist Alfonso Esparza examines how Janet’s Yellen’s statements on Tuesday—which signaled that an interest rate increase wasn’t imminent—impacted gold futures and palladium.
Yellen, testifying to the Senate Banking Committee on Tuesday, indicated that a change in the Fed’s guidance on interest rates won’t lock the central bank into a timetable for tightening. Higher interest rates curb gold’s appeal because the metal generally gives returns only through price gains.
Gold has increased 1.8% this year as signs of an economic slowdown in China and turmoil over Greece’s debt boosted demand for haven assets. While the US labor market is improving, inflation is below the Fed’s goal and wage growth is “sluggish,” Yellen said. She’s scheduled to appear before the House Financial Services Committee on Wednesday.
By Alfonso Esparza,Senior Currency Strategist, OANDA