Gold falls as dollar rises after Yellen speech

Gold fell and the dollar rose on Friday (September 25th), after Federal Reserve chair Janet Yellen said the central bank is still on course to hike rates in 2015.

Stocks in Europe were broadly higher after the Fed boss reiterated her view that the US economy will be able to handle higher rates some time this year.

Ms Yellen said policymakers “currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter”. But she warned that any “surprises” could change the Fed’s judgment about appropriate monetary policy.

The comments were supportive of the dollar, which rose to a one-month high. Against the yen, the dollar rose 0.7 per cent as USD/JPY knocked on the 121 handle. EUR/USD dropped 0.5 per cent to 1.1171, while GBP/USD retreated to 1.5224, close to Thursday’s three-week low of 1.5197.

Gold was lower as risk appetite improved. On the Comex in New York, gold futures for December delivery dropped 0.8 per cent to $1,144.30 an ounce, having risen by two per cent in the previous session to close at $1,153.80.

European stocks were up, with the FTSE 100 leading the way as a rally in mining shares boosted the UK blue chip index. By lunch on Friday the FTSE was up 2.5 per cent at 6,110.72, with platinum group metal specialist Johnson Matthey the biggest riser, up 5.5 per cent.

In Frankfurt, the DAX put on close to three per cent, while the CAC 40 in Paris climbed 3.5 per cent.

Futures trading pointed to a strong open on Wall Street after the main indices slid on Thursday before Ms Yellen’s speech.

Oil rose, with Brent futures trading up at $48.29 and US light crude climbing 0.75 per cent to $45.25.