Investing.com – Gold prices surged above $1,300, as gold bugs continued to cheer a speech by Federal Reserve chair Janet Yellen, which failed to include details on monetary policy or balance sheet normalization, narrowing investor expectations of a rate hike later this year.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose $17.59, or 1.36%, to $1,315.50 a troy ounce.
Gold prices raced to a nearly 10-month high on Monday, buoyed by a sixteen-month slump in the dollar as investor expectations of an additional rate hike continued to fade, following Fed chair Janet Yellen’s decision to sidestep monetary policy in a speech at Jackson Hole on Friday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.37% to 92.14.
Gold is sensitive to moves lower in both bond yields and the U.S. dollar – A lower dollar makes gold cheaper for holders of foreign currency while a dip in U.S. rates, reduce the opportunity cost of holding non-yielding assets such as bullion.
According to investing.com’s fed rate monitor just over 30% of traders expect the fed to hike rates in December.
Gold’s surge above $1,300 comes after recent political controversies engulfing President Donald Trump sparked concerns over his ability to deliver on tax reform, raising investor demand for safe-haven assets like gold.
Investor uncertainty over tax reform, however, is expected clear over the coming weeks after Trump's chief economic adviser Gary Cohen reassured market participants on Friday that the president will make a major push on tax reform in a series of speeches, the first one of which gets underway in Missouri on Wednesday.
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