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Gold climbs as Fed signals no rush to raise rates

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Gold rose on Wednesday, recovering from the previous day's seven-week low, after Federal Reserve Chair Janet Yellen suggested the central bank was in no rush to raise interest rates.

Her comments weighed on the dollar, supporting gold.

Spot gold was at $1,203, up 0.3 percent, after hitting a peak of $1,211.80 an ounce. U.S. gold futures for April delivery were up $5.50 an ounce at $1,203.

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Yellen held back on Tuesday from giving a clear view on when the Fed will begin raising rates. The ensuing rally in precious metals on Wednesday pushed silver up more than 3 percent and palladium to a six-week high.

Yellen said 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.

Gold finding support from Europe: Pro

"Yellen's comments yesterday suggesting the Fed will look at interest rates one meeting at a time were seen as providing less certainty of when an interest rate hike will be," Citi analyst David Wilson said.

"The dollar has softened a little bit, and I suspect that's the reason why gold's had a bit of a bounce."

World stocks stayed within reach of an all-time high as investors welcomed Yellen's comments.

Overnight in Asia, gold rose more than 1 percent to a session high after Chinese buyers returned from the Lunar New Year holiday, driving premiums higher on the Shanghai Gold Exchange.

SGE premiums 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 second-largest 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."