NEW YORK/LONDON: Gold jumped over 1 percent on Tuesday after comments from US Federal Reserve Chair Janet Yellen indicated the central bank’s cautiousness in raising interest rates.

Spot gold rose 1.4 percent to $1,238.21 an ounce by 12:52 p.m. EDT (1652 GMT), recovering from Monday’s one-month low of $1,208.15. US gold futures for April delivery were up $17.50 an ounce at $1,237.60.

In other precious metals, silver was up 0.7 percent at $15.326 an ounce, platinum was up 2.4 percent at $965 an ounce and palladium was down 0.5 percent at $570.10 an ounce.

Gold is highly sensitive to US monetary policy, as rising interest rates lift the opportunity cost of holding non-yielding bullion, while boosting the dollar.

The metal slid 3 percent last week after hawkish comments from a series of Fed officials.

The US Federal Reserve will proceed cautiously with hikes to interest rates, given global risks, Yellen said on Tuesday.

Early selling pressure against the dollar helped to buoy gold prices, which extended gains to session highs after the comments. The US dollar index hit session lows after on the dovish comments.

Last week’s comments from several Fed officials put investors on guard for the possibility of at least two rate increases this year.

But the Fed Chair’s comments on Tuesday raised the possibility of a slower path to rate hikes, traders said.





“It looks like we may be pricing back in just one interest rate hike. That’s why we’re rallying,” said Phillip Streible, senior commodities broker at R. J. O’ Brien in Chicago.

San Francisco Federal Reserve President John Williams said earlier that the US economy remained on track for a gradual path of interest rate hikes.

A run of soft data has added to uncertainty over the pace of rate increases. The dollar eased to a one-week low against the euro and US Treasury prices hovered near session highs, after figures showing slightly weaker-than-forecast rises in home prices reinforced the view of sluggish economic growth in the first quarter.