Gold jumped nearly 2 percent on Tuesday after comments from US Federal Reserve Chair Janet Yellen indicated the central bank's cautiousness in raising interest rates. Gold is highly sensitive to US monetary policy, as rising interest rates lift the opportunity cost of holding non-yielding bullion, while boosting the dollar. The metal slid 3 percent last week after hawkish comments from a series of Fed officials.
The Federal Reserve will proceed cautiously with hikes to interest rates, given global risks, Yellen said on Tuesday.
Spot gold rose 1.8 percent to $1,242.60 an ounce by 2:46 pm EDT (1846 GMT), recovering from Monday's one-month low of $1,208.15. US gold futures for April delivery settled up 1.3 percent or up $15.70 an ounce at $1,235.80. "It looks like we may be pricing back in just one interest rate hike. That's why we're rallying," said Phillip Streible, senior commodities broker at R.J. O'Brien in Chicago.
Elsewhere, data showed net gold imports by China, the world's biggest bullion consumer, via main conduit Hong Kong rose in February from a 17-month low hit in the previous month. In other precious metals, silver was up 0.7 percent at $15.327 an ounce, platinum was up 2.2 percent at $962.99 an ounce and palladium was up 1.7 percent at $577 an ounce.
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