Gold recovers on US Fedspeak

The price of gold recovered from a seven-week low on US central bank comments, which hinted that it would remain patient about raising interest rates.

Janet Yellen, the Federal Reserve chair, held back on Tuesday from fully indicating when the US central bank will finally begin hiking rates. Precious metals gained a boost on the uncertainty, which saw gold recover and silver climb over three per cent.

Gold continues to hover around the $1,200 level, but the outlook for the yellow metal is becoming increasingly bearish. Data from the CFTC showed that bullish positioning on gold was trimmed for the third consecutive week. Furthermore, short positions were increased over 40 per cent, which indicates that market movers are expecting the price of gold to fall.

The reasoning is likely due to a more healthy global economy pushing down demand for safe-haven assets. Tensions in Europe have eased as Greece received a four-month extension to its bailout, the European Central Bank will soon begin its stimulus scheme, and the robust US recovery means an interest rate rise this year is likely.

It all means the psychologically significant $1,000 level could be the next target for gold traders.