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In a speech to the Economic Club of New York on Wednesday, Yellen said that the Federal Reserve will keep benchmark interest rates low even as the economy improves to ensure sustained recovery, with ideal conditions not seen for another two years.
Monetary authorities hope to see the unemployment rate at the end of 2016 reaching 5.2-5.6% and inflation at 1.7-2%.
"If this forecast was to become reality, the economy would be approaching what my colleagues and I view as maximum employment and price stability for the first time in nearly a decade. I find this baseline outlook quite plausible," said Yellen.
"The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained.”
Gold prices were further bolstered Wednesday by a mixed batch of U.S. economic data.
Data earlier showed U.S. industrial production rose 0.7% in March from February, beating expectations for a 0.5% reading; however, soft U.S. housing data weighed on the dollar.
The Commerce Department reported earlier that housing starts rose 2.8% in March to 946,000, missing analyst forecasts for a 6.4% increase to 973,000 units.
Separately, building permits, an indicator of future demand for housing, fell 2.4% in March to 990,000, defying market expectations for a 0.6% increase.
Elsewhere, turmoil in Ukraine helped bolster demand for gold as a safe-haven asset.
The U.S. and its European allies are threatening a new round of penalties against Russian interests.
Envoys from Ukraine, Russia, the U.S. and European Union are scheduled to hold talks tomorrow in Geneva.
“As long as there’s uncertainty in Russia, having some exposure to gold makes sense,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, told Bloomberg in an exclusive interview. “With the selloff yesterday, it seems like cheaper insurance today.”
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