Janet Yellen gave gold bulls a gift when she signaled policy makers aren’t rushing to raise interest rates. Gold had its biggest weekly gain in two months on the prospect that U.S. rates will stay lower for longer. The value of assets in exchange-traded funds backed by bullion rose by $885 million, also the most since January.
The dollar had the steepest weekly slide since 2011 after Federal Reserve Chair Yellen and her colleagues cut their forecast on U.S. rates March 18. That revived interest in gold, which generally offers returns only through price gains. Some money managers misjudged the move, cutting their net-long position in gold futures to the lowest level since 2013 the day before the Fed statement.
“The market sentiment is that the Fed is going to take it easy, and that’s why the dollar has stopped gaining and gold moved up,” Donald Selkin, who helps manage about $3 billion as chief market strategist at National Securities Corp. in New York, said by phone March 20. “All of the experts got bearish right at the bottom.”
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