US gold futures rose at the highest level in a year on Thursday, amid growing skepticism on the capacity of the Federal Reserve to raise interest rates as much as you would like this year. In addition to a weaker dollar and US Treasury yields persuade investors to seek refuge in the precious metal.
Gold for April delivery on the Comex rose to an intraday peak of $1,215.30 a troy ounce, a level not seen in almost nine months. A day earlier, gold shed $4.00, or 0.33%.
Spot gold jumped as much as 3.6 per cent to $1,240.90 an ounce, its highest since February 2015. It is on track for its biggest daily rise since December 1, 2014.
President of the Federal Reserve, Janet Yellen said on Wednesday that financial conditions are becoming less conducive to growth as foreign developments pose risks to the economic outlook, but also keeps a moderate growth at home would justify “gradual adjustments “a stance of monetary policy of the Fed.
A gradual process with higher rates is seen as less of a threat for gold prices to a rapid series of increases.
Traders said fears of financial instability were fueled by European bank shares plunging to multi-year lows, with the growing concern about the bank profitability in a low growth environment and low interest rates.
Volatility in gold options surges highest in more than a year as investors have placed new bullish bets that prices will extend their recent upturn.
At the Multi Commodity Exchange, gold for delivery in April jumped up by Rs 338, or 1.19%, to Rs 28,655 per 10 grams in futures trade today, tracking a firming trend overseas.
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