Gold surged higher as Janet Yellen reassured markets that US interest rates would not rise before the middle of next year and any increase then would be steady.
Speaking after the latest meeting of the US Federal Reserve’s interest rate committee, Yellen, the Fed’s chairwoman, said the US central bank was comfortable interest rates could stay low for a considerable period.
Her comments came a day after minutes from the Bank of England’s last meeting indicated an interest rate rise in the UK this year and sent the pound surging higher against the dollar.
Gold traditionally moves in the opposite direction to the US currency, which also fell against the euro and a basket of other currencies.
As expected, the monthly bond-buying programme of mortgage assets and treasury bonds was trimmed by another US$10bn to US$35bn.
Fierce fighting in Iraq between Sunni militants and the Iraqi army at an oil refinery just north of Baghdad added to the improved sentiment for gold.
The US so far has resisted calls for its launch airstrikes against the militants, but the possibility of the conflict spreading across the Middle East may force it to reconsider.
Spot gold was US$17 at US$1,294 an hour after Wall Street’s opening, its highest level for three weeks.
There was also decent gains for silver, which climbed back above US$ 20 at US$20.24, while concerns that the strike across South Africa’s platinum mines may not have been settled pushed platinum US$14 higher to US$1,480.
