Update: Gold now up $40 to $1318.

Gold is now up $33 to $1310 after Yellen fanned the inflation flames by taking a dovish stance at yesterday’s FOMC.

It’s the largest rally since October 17. That was when the Fed surprised markets by not tapering and gold surged $40. That rally continued another $40 higher over the next two weeks but eventually reversed.

The rip higher today has broken all the major moving averages and is now threatening the May high of $1318. Next would be the April high of $1331.

Gold daily

Gold daily

I get the feeling that a short squeeze is as much a part of the moves in precious metals as Yellen’s musings but this kind of headline-grabbing move could pull in more money from the gold bugs and keep the momentum going.