Gold rose for a second session and held above $1,200 an ounce on Thursday as comments from Federal Reserve Chair Janet Yellen led investors to believe U.S. interest rates would start to rise later than expected this year. Firm Chinese physical demand also supported bullion as buyers from the world’s No. 2 consumer trickled back into the market after the long Lunar New Year break, although it was not strong enough to push the spot price above Wednesday’s peak.
Bullion was up 0.3 percent at $1,208.50 an ounce at 0302 GMT. It rose as much as 1 percent to $1,211.80 on Wednesday after Yellen indicated the Fed would be flexible in raising rates. She told the Senate Banking Committee on Tuesday that while the Fed was preparing to consider rate hikes on a “meeting-by-meeting basis”, an increase was not likely for at least the next couple of meetings.
Yellen did not offer any additional insight on the timing of a rate increase before the House of Representatives’ Financial Services Committee on Wednesday. Markets had until now been focusing on June. The comments support “market thinking that the Fed may hike rates later this year and the path will be a little flatter than what was previously expected”, said ANZ Bank analyst Victor Thianpiriya.