Gold Prices Turn Up As Yellen Speech Nears

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Janet Yellen

Prices for gold and the SPDR Gold Trust (ETF) (NYSEARCA:GLD) edged up in morning trading on Friday ahead of a speech by the Federal Reserve Chair, Janet Yellen.

Gold futures for December delivery could be seen gaining more than 0.28% in the morning hours in Europe. The yellow metal had earlier hit a session high of $1,328.45 a troy ounce in European trading. Earlier in Asian trading, the precious metal had also advanced but barely, rising about 0.02%.

Gold retreated 0.4% on Thursday, hitting its lowest price level last seen on July 25 amid nervous trading ahead of a closely watched speech by Fed chief Yellen.

Fed annual gathering

Yellen is due to speak at an annual conference of the central bank in Jackson Hole, Wyoming. The meeting began Thursday, but Yellen will be delivering her speech Friday.

Though there are no hints about what exactly Yellen will say in her speech, Fed chiefs have sometimes used the gathering to issue important policy statements. Traders are hoping that Yellen will do the same by providing clues about what the Fed intends to do about interest rates in the near-term.

What Yellen says about the Fed rate review will affect the dollar and gold prices. If her comments signal a near-term rate increase, the greenback is expected to gain and that will result in diminished appetite for gold.

Upbeat economic data

A number of Fed policymakers have appeared to support a rate increase this year, claiming that prolonging the move would hurt the economy. Recent economic data have also seemed to back a near-term rate hike. The Labor Department reported that initial jobless claims declined by 1,000 last week to hit a 5-week low of 261,000. Economists were expecting jobless claims to rise by 3,000.

Another report said that orders for durable manufactured goods rebounded in July from the previous month and exceeded forecasts.

With the upbeat economic data, some investors are betting on a near-term rate increase by the Fed. But what Yellen says in her speech today will tell whether those expectations are valid.

Forex market

In forex trading, the dollar eased against a basket of major foreign rivals with the U.S. dollar index pulling back 0.06% in midmorning trading in Europe. USDJPY eased 0.05%, AUDUSD gained 0.13%, EURUSD rose 0.04% and GBPUSD advanced 0.11%.

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