Gold prices climbed Wednesday, a day after the commodity finished lower on the back of comments from U.S. Treasury Secretary Janet Yellen, which were viewed as bearish for precious metals.
Yellen, formerly head of the Federal Reserve, initially suggested in an interview published Wednesday that the Fed may need to raise interest rates to rise to keep the economy from overheating.
However, the Treasury boss later clarified her remarks at The Wall Street Journals CEO Council Summit, saying that she was neither predicting nor recommending that the Fed raise rates. She also said that she didnt anticipate inflation being a sustained problem for the economy as it bounces back from COVID.
In the commodity sphere, gold was another casualty of Yellens communication mishap, suffering at the hands of rising Treasury yields and a firmer dollar, wrote Marios Hadjikyriacos, investment analyst at XM, in a daily report.
Rising interest rates can undercut the appeal of owning gold because precious metals dont offer a coupon.
June gold rose 5, or 0.3, to trade at 1,781 an ounce, following a 0.9 decline on Tuesday, a fall that yanked the commodity down from its highest settlement for a mostactive contract since April 21.
The XM analyst said that gold is still maintaining a fairly bullish posture despite its recent decline and could go higher still if the Fed remains accommodative in the face of rising inflation.
On the bright side, the yellow metal is still trading safely above the…