NEW YORK: Gold jumped on Wednesday after US Federal Reserve Chair Jerome Powell reassured investors that the central bank would continue its accommodative monetary policy despite a spike in inflation readings.

Spot gold rose about 1% to $1,824.75 per ounce by 2:46 pm EDT. US gold futures settled up 0.8% at $1,825.

Powell, in prepared remarks before a congressional hearing, said the US job market “is still a ways off” from the progress the Fed wants to see before reducing its support for the economy, while current high inflation will ease in the coming months.

Data showed US consumer price and producer price indexes surged last month.

“It (Powell’s comments) really cements the belief that despite this hotter inflation data, the Fed still remains on course to be fairly accommodative,” said Edward Moya, senior market analyst at OANDA.

Investors on Wednesday also cheered comments by European Central Bank (ECB) officials that the central bank would not tighten too early.

“You’re going to see more dovish signals from the ECB and the People’s Bank of China, which should provide some support to the dollar, but this is still good news for the stimulus trade and that is going to be very positive for gold,” Moya said.

Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-interest bearing bullion.

A weakened dollar, which restored gold’s allure to holders of other currencies, and a dip in US treasury yields, added further support.

TD Securities also said Chinese funds may have been buying gold’s recent dip, with physical purchases also providing support.

Elsewhere, palladium edged up 0.2% at $2,833.50 an ounce, while platinum jumped 2.3% to $1,130.01.

HSBC said in a note, that while it expects platinum to be in a small surplus this year, prices would remain firm largely in response to rising automobile demand and average $1,160 an ounce this year.

Silver climbed 0.8% to $26.18 per ounce.