Yellen's testimony pushes gold to a 3-month high
Gold futures broke through the key technical resistance level of $1,280 on the back of Janet Yellen's testimony before Congress on Tuesday.
Yellen's Monetary Policy Report is her first since she was confirmed as chair of the Federal Reserve on Jan. 6.
Yellen's dovsih comments helped drive gold and other risk assets higher, and now traders await another day of testimony from her Thursday.
The April gold futures contract settled at $1289.80 per troy ounce, the highest settle in three months. That was a gain of 1.2 percent.
In her prepared remarks Wednesday, Yellen focused on continuity and keeping up the Fed's current approach to monetary policy, which includes paring back its $85 billion a month in asset purchases, now at $65 billion per month.
Some traders had expected that Yellen might strike a more dovish chord on the back of the last two weak nonfarm payrolls reports, but as others suspected she stayed consistent with Ben Bernanke's policies.
Gold has tested the $1,278-$1,280 level four times and failed to break and close above that level, but traders bought bullion Tuesday on the assumption that continued tapering of QE might prompt investors to rotate out of equities into other assets, especially those with safe-haven status, like gold.
(Read more: Yellen just added pressure on emerging markets)
"North American traders set the market up perfectly yesterday, edging gold near the $1,278 level by the close and allowing the thin opening in Asia to propel it as physical demand continues. Gold moved quickly to within $2 of our suggested $1,292 target and now awaits 'guidance' from Janet Yellen," said Peter Hug, global trading director at Kitco Metals, in a note.
(Read more: This will drop gold to $1,000: Credit Suisse pro)
"Technically, the market 'looks' good, but momentum continues to concern me. Taking out $1,292 should create a path to around the $1,325 range ... the market creeps, putting in higher lows on retracements, and although not surging, taking out resistance levels one by one. It took a lot of work to breach $1,278 and now the bulls need it to hold," Hug said.
—By CNBC's Jackie DeAngelis. Follow her on Twitter @JackieDeAngelis