Gold Rally Loses Steam After Yellen

Gold fell from one-month highs on Friday after Federal Reserve chair Janet Yellen kept the door open to an increase in USA interest rates this year, sparking a dollar rally, while palladium was on track for its biggest weekly rise in nearly four years.

A university spokesman said she would attend a dinner event as planned.

Crude oil closed higher after the number of active drilling rigs in the USA dropped for their fourth straight week. Stock benchmarks were higher in Taiwan, but lower in Singapore and Indonesia.

Yellen gave an upbeat assessment of the economy and reiterated that the Fed will likely raise rates by the year end.

In early USA trading, 10-year Treasuries were down 15/32 in price for a yield of 2.175 percent, up 5.5 basis points from late on Thursday. Despite problems in China and Europe, Yellen does not think these issues will prove large enough “to have a significant path of the path of policy“. “Although the U.S.is continuing to improve, outside the USA, it’s just scary”. “Financial markets had adjusted their expectations downwards for such a rate hike after last week’s meeting“. “The more prudent strategy is to begin tightening in a timely fashion and at a gradual pace, adjusting policy as needed in light of incoming data”, she said on Thursday.

“With equities having sold off following the Fed’s decision to leave rates on hold last week, the bullish (market)… reaction suggests investors would prefer the Fed to get on with it and raise rates sooner rather than later”, said Mike van Dulken, analyst at Accendo Markets trading group.

Yellen cautioned that inflation may rise more slowly or rapidly than anticipated, which would prompt policy adjustments. “By itself, the precise timing of the first increase in our target for the federal funds rate should have only minor implications for financial conditions and the general economy“, she said. The S&P 500 gained 14.16 points, or 0.73 percent, to 1,946.4 and the Nasdaq composite added 47.78 points, or 1.01 percent, to 4,782.26.

“Nevertheless, the Committee expects that inflation will gradually return to two percent over the years two or three years”, she said.

“However, that is still just a forecast and there are risks and uncertainties, particularly relating to ‘global economic and financial developments”‘.

Before the speech several people said they had spent time with Yellen during the busy day in this college town.

In 2004, at age 57, she ran the Avenue of the Giants half marathon, in the redwood forests of Northern California.