Gold rallied to a 9-1/2-month high on Monday, breaching $1,300 per ounce as the dollar fell and the euro rose after the head of the European Central Bank (ECB) said that the euro zone's economic recovery had taken hold at a meeting of central bankers. At the meeting in Jackson Hole, Wyoming, the ECB's Mario Draghi said the bank's ultra-loose monetary policy was working and the euro zone's economic recovery had taken hold, refraining from commenting on the euro's recent strength.
That pushed the euro to its highest in more than 2-1/2 years against the US dollar, while the dollar index fell to its lowest since May 2016. "Draghi did not refer to the strong euro being a brake on policy normalization - this is what triggered the rally in the euro and the price reaction in gold mirrors what the currencies did," Julius Baer analyst Carsten Menke said.
Spot gold rose 1.4 percent at $1,309.25 an ounce by 2:01 p.m. EDT (1801 GMT), after rising to its highest since early November at $1,309.98. US gold futures settled up 1.3 percent at $1,315.30. Many traders were away from their desks due to a British public holiday. At Jackson Hole, US Federal Reserve Chair Janet Yellen made no reference to US monetary policy but instead focused on financial regulations, leading traders to expect interest rates to be raised more slowly.
Speculators raised their net long position in COMEX gold for the sixth straight week in the week to Aug. 22. In other precious metals, silver was up 2 percent at $17.39 an ounce, after touching its highest since early June at $17.45. Platinum rose 1.3 percent to $984.50 and palladium edged up 0.5 percent to $934, close to a 16-1/2-year high of $940.50 hit on Friday.
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