Janet Yellen said the central bank would not be raising interest rates soon - “Some politicians for years have been predicting runaway inflation"

From the right and left (hawk and dove) came these rhetorical statements/questions:

Senator Richard Shelby of Alabama, Chairman of the Banking Committee said, “Many question whether the Fed can rein in inflation and avoid destabilizing asset prices when the time comes to unwind its massive $4.5 trillion balance sheet.” Patience, he warned, “could lead to a more painful correction down the road.”

Senator Sherrod Brown of Ohio, recently seated as the ranking Democrat on the same committee, countered that concerns about inflation were misplaced.

“Some pundits and politicians for years have been predicting runaway inflation, but they clearly do not have a very good grasp of what is happening for most Americans. Low wage growth has continued for the majority of Americans, and the declining participation in the workforce is troubling.”

Here is a wake up call for Mr. Shelby. Even when the Fed finally gets around to raising rates, it will come in modest increments. And, one rise will not necessarily beget another. If, as Senator Brown says, labor force participation is declining, and, as others have pointed out wage pressure is virtually non-existent, barring some unforeseen set of events, where would inflation come from?

Gold seemed to take Yellen’s comments and news of a resolution of the Greek crisis in stride. It dropped a small amount while equities and oil rose. For now, gold has lost its haven appeal and is looking for direction from other news.

Major Asian gold markets, most importantly China’s, remained closed for the Lunar New Year break, removing key support for gold prices. The end of the New Year gold buying period is also off the table now that the holiday is indeed in high gear.