Yesterday, Fed Chair Janet Yellen delivered a speech entitled “Current Conditions and the Outlook for the U.S. Economy” at the World Affairs Council of Philadelphia. What can we learn from it?

On Monday, Janet Yelled delivered a highly anticipated speech, which followed the terrible May jobs report. At first glance, the Fed Chair dismissed the disappointing non-farm payrolls slightly, as she said: “one should never attach too much significance to any single monthly report”. Moreover, Yellen stated that although this past Friday’s labor market report was disappointing, “further gradual increases in the federal funds rate are likely to be appropriate and most conducive” to meeting the Fed’s objectives.

On the other hand, Yellen did not provide a timeline for changing interest rates, dropping her last ‘coming months’ promise given during a speech at Harvard University. It clearly signals that she is more dovish now than in May. Indeed, she pointed out: “the monthly labor market report is an important economic indicator, and so we will need to watch labor market developments carefully”. For us, it means that the Fed will not hike interest rates in June, as it would like to see another job market to determine whether the markedly reduced pace of hiring in April and May is a harbinger of a persistent slowdown in the broader economy or the payroll gains will move up toward the solid pace they maintained earlier this year and in 2015. Similarly, Yellen noticed: “monetary policy is not on a preset course and significant shifts in the outlook for the economy would necessitate corresponding shifts in the appropriate path of policy”. The terrible job reports in the two last months may be such significant shifts in the outlook for the economy.

Investors seem to think in a similar way, as the market odds of an interest rates hike in June remained unchanged at just 3.8 percent, while the odds of a July hike declined. Thus, the report should be rather positive for gold. Indeed, the price of the shiny metal ended the U.S. session slightly higher.

The key takeaway is that Yellen tried to dismiss the terrible jobs market. However, she dropped her ‘coming months’ promise, implying that the Fed Chair sounded more dovish than recently. It is rather good news for the gold market, as the yellow metal has recently been under downward pressure due to Yellen’s hawkish stance and elevated odds of an interest rate hike in June or July.