Gold Posts Biggest Daily Gain in Nine Months; Investor Caught Flat-Footed by Fed's Outlook on Rates
Gold prices posted the biggest daily gain in nine months on Thursday, driven by investors who were caught flat-footed by the Federal Reserve's outlook for continued low interest rates.</br></br>Gold for August delivery, the most actively traded contract, rose 3.3%, the biggest one-day percentage gain since September 2013. The contract rose $41.40 to $1,314.10 a troy ounce, its highest level since April 14.</br></br>Meanwhile, silver for July delivery gained 4.4% to $20.648 an ounce, its highest settlement since March 19.</br></br>Gold prices rocketed past the psychologically important $1,300-an-ounce level, breathing new life into the market and luring momentum-chasing funds in as buyers, brokers said. Gold futures had crossed above their 50-day and 100-day moving averages in quick order, sending buy signals to investors who follow such technical indicators.</br></br>Fed Chairwoman Janet Yellen on Wednesday gave a positive assessment of the U.S. economy and reiterated that rates would stay low for a long time. The comments surprised some traders, who had bet against gold expecting a more hawkish view from the Fed, forcing them to cut their losses Thursday by purchasing the metal. Prices for gold, which pays no dividend, tend to weaken in times of rising interest rates, as investors seek out higher-yielding assets.