Gold prices gained on Wednesday after U.S. Federal Reserve Chair Jerome Powell promised to keep interest rates near zero for some time.
Gains were however capped by a slight uptick in the dollar as investors waited for further clarity on inflation.
Spot gold was up 0.2% at $1,781.18 per ounce, while U.S. gold futures gained 0.2% at $1,781.30 per ounce.
Gold prices plunged 6% last week after the Fed struck a hawkish tone and brought forward projections for the first post-pandemic interest rate hikes into 2023.
However, Powell on Tuesday reaffirmed the central bank’s intent to encourage a “broad and inclusive” recovery of the job market, and not raise interest rates too quickly, based only on the fear of coming inflation.
Gold tends to appreciate based on expectations of lower interest rates, which reduces the opportunity cost of holding non-yielding bullion.
Benchmark 10-year Treasuries yields inched lower after Powell’s Congressional testimony. The dollar index rose 0.1% in the session against its rivals, making gold more expensive for holders of other currencies.
Elsewhere, silver climbed 0.8% to $25.95 per ounce, palladium rose 0.8% to $2,578.75. Platinum was up 0.4% at $1,083.01.