Gold prices touched its highest settlement in more than a year. This upsurge was prompted by the U.S. dollar registering its biggest weekly decline since February. The greenback weakened after Federal Reserve Chairman Jerome Powell signaled a “gradual” rate hike pace. Rising gold prices bode well for the overall precious metals market.

Gold lost some of its luster in 2016 after a tumultuous 2015 but managed to maintain its bull run in 2017. Moreover, the yellow metal has managed to register a steady increase so far this year. With gold prices shining, investors could eye mutual funds that have significant exposure to the precious metals sector.

Gold Best in More Than 3 Weeks

In the annual Fed symposium in Jackson Hole, Wyo, Powell said that the “gradual process of normalization” of key interest rate is appropriate as there is no “elevated risk of overheating.” Powell added that the Fed is ready for “whatever it takes” in case inflation goes out of control “or should crisis threaten again.”

Powell also said that although inflation recently came near 2% there is “no clear sign of an acceleration” higher than the desired level. Powell’s statement has two hawkish points, overheating may negatively weigh more on financial markets than inflation and policymakers should closely watch the measures taken for labor market tightness.

Also, Powell’s comments clearly indicated two more rate hikes this year, following which U.S. dollar declined. This was the primary trigger for the rise in prices of precious metals, including gold. The U.S. dollar index declined 0.5% to 95.161 on Aug 24. The index registered a weekly fall of 1%, its worst since February.

Gold prices increased 1.6% to settle at $1,213.30 per ounce on Aug 24, its best level in last three weeks and biggest one-day rise since March. Prices of the yellow metal were even up 0.1% at $1,206.57 an ounce early Aug 27.

Valuation Concerns Are a Boon for Gold