Bengaluru: Gold prices rose on Thursday after US Federal Reserve chairman Janet Yellen said the central bank would only gradually tighten monetary policy, curbing speculation that interest rates would rise more than once in 2017.

Spot gold rose 0.3% to $1,223.11 per ounce at around 9am. US gold futures for August delivery rose 0.3% to $1,222.60 per ounce.

The US economy is healthy enough for the Fed to raise rates and begin winding down its massive bond portfolio, although low inflation and a low neutral rate may leave the central bank with diminished leeway, Yellen said on Wednesday.

The dollar slipped as Yellen’s comments sparked a significant decline in US treasury yields.

“A weaker dollar and falling rates could be helpful for the precious metal, but continued strength in US equities remain a drag," said INTL FCStone analyst Edward Meir.

Lower yields reduce the opportunity cost of holding non-yielding gold, while a weaker dollar makes bullion cheaper for non-US investors. Higher interest rates would push yields up and likely boost the dollar.

“Gold’s fate in the short term will undoubtedly be decided on Friday now by the US CPI (consumer price index) data which is indeed shaping up to be a major driver for the big dollar, equities and bonds as well," said Jeffrey Halley, senior market analyst at OANDA Corp.

Spot gold may revisit its 10 July low of $1,204.45 per ounce, as its bounce from this level could have completed, according to Reuters Technical analyst Wang Tao.

Among other precious metals, silver rose 0.4% to $15.94 per ounce.

Palladium fell 0.1% to $862.85 per ounce. Platinum rose 0.3% to $918.90 per ounce, adding to a 1.7% gain in the previous session, its biggest since 2 June. Reuters