Gold futures have risen after Federal Reserve Chair Janet Yellen said recent data have pointed to softness in the US economy, increasing demand for the precious metal as an alternative investment.
"Part of that softness may reflect adverse weather conditions, but at this point it's difficult to discern exactly how much," Yellen told the Senate Banking Committee on Thursday.
This year, gold has gained 11 per cent. In 2013, the metal plunged 28 per cent, the most since 1981, amid a US equity rally to a record and muted inflation.
"There is some safe-haven buying," Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. "The Fed clearly seems concerned about the economic conditions."
Gold futures for April delivery climbed 0.3 per cent to settle at $US1,331.80 an ounce at 1.47pm (0447 Friday AEDT) on the Comex in New York. Yesterday, the price reached $US1,345.60, the highest for a most-active contract since October 30.
Yellen affirmed the Fed's pledge to keep the benchmark interest rate low at least as long as unemployment stays above 6.5 per cent and the outlook for inflation doesnt exceed 2.5 per cent.
Gold headed for the second straight monthly gain, the longest rally since August, amid turmoil in emerging markets and concern that the US recovery may be faltering. Gunmen occupied Ukraines Crimea regional parliament and raised the Russian flag as lawmakers in the capital meet to approve a new cabinet after last week's ouster of Viktor Yanukovych as leader.
"Heightened geopolitical risks as tensions in the Ukraine mount are supportive of gold," James Steel, an analyst at HSBC Securities (USA) Inc, said in a note. "Should events in Ukraine deteriorate and involve neighbouring countries, gold could benefit from increased safe-haven demand."
Gold for immediate delivery fell 0.1 per cent to $US1,329.58 at 2.43pm (EDT) after gaining as much as 0.4 per cent.
Analysts are split on the price outlook.
