By Ira Iosebashvili
Gold prices turned lower Thursday, after Federal Reserve Chairwoman Janet Yellen said she believed a recent downturn in inflation won't last.
Gold for August delivery was recently down 0.1% at $1,217.80 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices were as high as $1223.60 a troy ounce earlier in the session.
In testimony to the Senate Banking Committee, Ms. Yellen said a stronger labor market and rising prices of imported goods supported her expectations for inflation to rise in the future.
Rising consumer prices would give the Fed a freer hand to raise interest rates, a bearish development for gold, which struggles to compete with yield-bearing investments when rates rise.
Investors are watching Ms. Yellen's testimony and U.S. data for clues on the path for higher interest rates. The Fed raised rates at its meeting last month and stuck to its projection for one more rate increase this year, but some investors remain skeptical given a recent slowdown in inflation.
While higher rates in the U.S. would weigh on gold, prices for the popular haven will likely be supported by ongoing political uncertainty and a possible return to volatility in financial markets, analysts at National Australia Bank said in a note to clients. They expect prices to end 2017 at $1,235 a troy ounce.
In base metals, copper fell 0.5% to $2.6710 a pound.
Write to Ira Iosebashvili at firstname.lastname@example.org