Gold futures were nearly flat after Yellen’s comments sounded more dovish than expected

Gold drops

The price of gold traded close to the flat line on Thursday following the released testimony of Fed chair Janet Yellen suggesting that the reduction of its immense balance sheet would be gradual. This also heightened expectations that another rate hike will happen this 2017.

U.S. Federal Reserve Chair Janet Yellen said last Wednesday that the economy of the United States doesn’t necessarily need stimulating for the Fed to lift interest rates and start tightening monetary policy. However, low neutral rate and poor inflation may limit the growth of several central banks.

Federal Reserve president in Kansas City Esther George also said on the same day that short-term interest rates in the U.S. now is likely to be low for Fed to call the next downturn in the U.S. economy, despite four rate increases since December 2015.

Meanwhile on prices, U.S. gold futures were slightly lower by 0.06 percent and finished at $1,218.30 an ounce for its August delivery. Spot gold settled close to the flat line at $1,219.06 an ounce.

On currency news, the U.S. dollar outperformed most of its major peers on Thursday following the news that U.S. Federal Reserve Chair Janet Yellen sounded more dovish than expected. It is already given that a much stronger U.S. dollar is not good with gold because it makes the non-yielding bullion high-priced for holders outside the U.S., which will further reduce the demand. Also in the stateside, 30-stock index Dow Jones ended to a record close.

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