Gold trades -0.24% lower at 1235.65, having posted session highs at 1239.23 last hours. The yellow metal keeps the offered tone intact this session as the latest remarks from Fed Chair Yellen at her speech post-Wall Street close, were read as less dovish as she reiterated that the US economy remains on a solid footing and hence, calls for further rate increases this year. Gold tends to benefit in low interest rate regime as it is a non-interest paying precious metal. Meanwhile, the USD index jumps +0.13% to 94.62, near session tops.
In addition, the members emphasized that heightened global risks and the “asymmetric ability” of monetary policy to respond to the shocks were strong enough factors to prompt the committee to express caution with the timing of future rate hikes. Notably, the FOMC included 10 references to “gradual” accommodation when it came to monetary policy in the minutes.
Any rate hikes by the Fed this year are viewed as bearish for gold which struggles to compete with high yield bearing assets in rising rate environments.