Gold gained in Asia on Thursday off testimony by the Fed chief that the pace of interest rate hikes would be gradual in otherwise holiday-thinned trade with markets in Japan and China shut.

On the Comex division of the New York Mercantile Exchange, gold for April delivery gained 0.42% to $1,199.60 a troy ounce.

Silver for March delivery gained 0.28% to $15.325 a troy ounce, while copper for March delivery lost 0.01% to $2.017 a pound.

Overnight, gold futures were relatively flat on Wednesday, remaining near eight-month highs, as Federal Reserve chair Janet Yellen reiterated that current conditions in the U.S. economy are likely to warrant gradual interest rate hikes by the U.S. central bank in the near-term future.

On Wednesday morning, Yellen testified before the U.S. House of Representatives Financial Services Committee for the first time since the Federal Open Market Committee (FOMC) ended a seven-year zero interest policy late last year. At a historic meeting in mid-December, the FOMC raised short-term interest rates for the first time in nearly a decade by lifting the target range on its benchmark Federal Funds Rate by 25 basis points to 0.25 and 0.50%. The FOMC followed by leaving the target rate unchanged at a meeting in late-January.

In her testimony, Yellen emphasized that the Fed's monetary policy cycle is not on a preset course, as further interest rate decisions will continue to depend on incoming economic data over the next several months. Yellen also noted that the neutral nominal federal funds rate, or the rate which is neither expansionary or contractionary if the economy is operating at its full potential, is "currently low by historical standards." Yellen cited a range of economic headwinds for restraining the rate including: the appreciation of the dollar, limited credit availability for borrowers and weak growth abroad.

Moving forward, Yellen stressed that diminishing slack in the labor market and a bottoming of oil price declines could help move inflation back toward the Fed's long-term targeted goal of 2%. Core PCE Inflation, the Fed's preferred gauge of inflation, currently hovers at 1.4%, considerably below the FOMC's objective.

"In particular, stronger growth or a more rapid increase in inflation than the Committee currently anticipates would suggest that the neutral federal funds rate was rising more quickly than expected, making it appropriate to raise the federal funds rate more quickly as well," Yellen testified.

Any rate hikes this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.

Source:-Forexpros