Gold Rises After Fed's Patience to Linger

02/26/2015 7:00 am EST

Focus: COMMODITIES

Alfonso Esparaza

Senior Currency Strategist, OANDA

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.

Gold futures rebounded from a seven-week low after Federal Reserve Chair Janet Yellen signaled an interest rate increase isn’t imminent. Palladium climbed to the highest in almost six weeks.

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

Related Articles on COMMODITIES