After Federal Reserve Chair Janet Yellen pushed off an interest-rate hike, gold related exchange traded funds popped Thursday, with bullion prices rising the most in five weeks.
On Thursday, the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) gained about 1.3%. The gold ETFs, though, remain relatively flat for the year, rising 0.3%.
COMEX gold futures rose 2.1% Thursday, trading around $1,202 per ounce.
While the Fed will not hike interest rates in June, Yellen stated that an interest rate hike this year is not out of the picture.
“We could see more asset allocation in gold because Yellen sounded more dovish than the market expected,” George Gero, a senior vice president at RBC Capital Markets, said in a Bloomberg article.
Higher interest rates would diminish gold’s attractiveness since the precious metal does not pay interest like fixed-income assets.
Additionally, the Fed’s views pressured the U.S. dollar, which typically strengthens on tighter monetary policies or higher interest rates. Consequently, gold and other commodities found support form the USD’s dip as a cheaper greenback makes USD-denominated commodities less expensive to foreign traders, MarketWatch reports.