BENGALURU (Reuters) - Gold prices rose on Thursday after U.S. Federal Reserve Chair Janet Yellen said the central bank would only gradually tighten monetary policy, curbing speculation that interest rates would rise more than once this year.
Spot gold rose 0.3 percent to $1,223.11 per ounce at 0351 GMT. U.S. gold futures for August delivery rose 0.3 percent to $1,222.60 per ounce.
The U.S. 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 U.S. Treasury yields.
"A weaker dollar and falling rates could be helpful for the precious metal, but continued strength in U.S 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-U.S. 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 U.S. CPI 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.
Spot gold may revisit its July 10 low of $1,204.45 per ounce, as its bounce from this level could have completed, according to Reuters Technical analysts, Wang Tao.
Among other precious metals, silver rose 0.4 percent to $15.94 per ounce.
Palladium fell 0.1 percent to $862.85 per ounce. Platinum rose 0.3 percent to $918.90 per ounce, adding to a 1.7 percent gain in the previous session, its biggest since June 2.
(Reporting by Nithin Prasad and Arpan Varghese in Bengaluru; Editing by Richard Pullin)