Gold rose 1 percent on Thursday after comments from the Federal Reserve pushed back expectations for the first U.S. rate hike in nearly a decade, and as Chinese buyers snapped up metal on their return from the Lunar New Year break.
Spot gold was up 1.1 percent at $1,217.95 an ounce at 1015 GMT, after hitting a session high of $1,219.90.
Fed chair Janet Yellen indicated in testimony to the Senate Banking Committee on Tuesday and the House of Representatives’ Financial Services Committee on Wednesday that the U.S. central bank was in no rush to raise interest rates.
Since then, some analysts have shifted expectations for the first U.S. rate hike since 2006 to happen in September or later this year, instead of June previously.
“The combination of China returning, Yellen pushing the can further out, bond yields lower and exchange-traded product demand picking up has helped create a floor following a $117 sell-off (in gold) since January,” Saxo Bank’s head of commodity strategy Ole Hansen said.
“I see it potentially building on this up towards $1,235, while a break back above the 200 day moving average (currently at $1,246) will be one step too far at this stage.”
Gold prices have fallen around 10 percent over the last year, largely due to the prospect of higher U.S. rates, which would increase the opportunity cost of holding non-yielding bullion, while boosting the dollar.
U.S. gold for April delivery rose 1.3 percent to $1,217.40 an ounce.
Premiums on the Shanghai Gold Exchange remained firm around $4-$5 an ounce over the global spot price as buyers returned to the market after the Feb. 18-24 holiday in China.
“Physical gold demand appears to be picking up again now that Chinese traders have returned after the New Year celebrations,” Commerzbank said in a note. “This is reflected in the premiums being paid on the Shanghai Gold Exchange.”
Data showed on Thursday that China’s gold imports from Hong Kong rose in January from the previous month, reflecting increased demand ahead of the Lunar New Year. Net gold imports from Hong Kong climbed to 76.118 tonnes last month from a three-month low of 71.381 tonnes in December.
Other precious metals also advanced, with spot palladium rising almost 1 percent to $814.35 an ounce, its highest since Jan. 14.