Gold futures surged to a three-week high on Wednesday, adding to overnight gains as the U.S. dollar was clobbered by rival currencies amid fading prospects of a Federal Reserve rate hike in the near term following the release of dismal jobs figures.
Fed chief Janet Yellen said on Monday that the the U.S. economy is on track to recovery and that central bank is looking to raise interest rate hikes. She, however, didn’t say anything about the timing of the rate increases.
As a result of the uncertainty the remarks created, the U.S. dollar index declined to 93.52 early Wednesday, the lowest in over a month.
An underperforming dollar usually benefits gold prices, as it lifts the metal’s appeal by making dollar-priced commodities more affordable for holders of competing currencies.
In New York, Gold for August delivery jumped to an intraday peak of $1,259.10 a troy ounce, the most in three weeks. It was trading at $1,259.15 at 8:33AM ET, up 0.97% or $12.15.
So far in June, gold prices have risen by nearly 4%, after falling more than 6% in May, as investors focused odds on the timing of the next U.S. rate hike.
Gold is particularly sensitive to changes in U.S. interest rates given its inverse relationship to the greenback. A gradual path to higher rates is preferred by gold investors.
Meanwhile, silver futures for July delivery tacked on 3.27%, or 53.6 cents, to trade higher at $16.93 a troy ounce during early trading hours in New York, while copper futures gained 0.98%, or 2.0 cents, to $2.071 a pound.