Gold prices edged higher in European trade on Thursday, nearing a one-week high following Federal Reserve Chair Janet Yellen’s congressional testimony to gradually raise interest rates.

Comex gold futures were at $1,222.49 a troy ounce by 3:18AM ET (0718GMT), up $3.40, or around 0.3%.

Prices tallied a third-straight gain Wednesday after Yellen sounded cautious on inflation and noted the Fed would not need to raise rates “all that much further” to reach current low estimates of the neutral funds rate.

She also said that the U.S. economy is healthy enough for the Fed to begin winding down its massive $4.5 trillion balance sheet at some point this year.

The speech was seen as mainly dovish by market participants.

The dollar index traded down almost 0.3% at 95.31 in early trade, not far from the nine-month low of 95.22 plumbed in late June.

Yields of the benchmark 10-year U.S. Treasury fell to 2.32%, well off highs near 2.39% touched last week.

Investors now looked ahead to more comments from the Fed chair, will testify for a second day on the institution’s monetary policy in front of the House Financial Services Committee at 10:00AM ET (1400GMT).

The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year, but the subdued inflation outlook has since raised doubts over whether the U.S. central bank will be able to stick to its planned tightening path.

Also on the Comex, silver futures tacked on 2.2 cents, or roughly 0.2%, to $15.90 a troy ounce.

Among other precious metals, platinum was up 0.4% at $922.20, while palladium was little changed at $861.30 an ounce.

Source: Investing UK

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