Yellen, in prepared testimony ahead of a congressional hearing, said that she would "carefully monitor" U.S. economic conditions as the labour market tightens but that inflation was lagging behind the Fed's targets.
"The recent drop in gold reflects the market pricing in additional tightening from central banks", Danske Bank analyst Jens Pederson said.
These include costs for cell phone services and medications, economists say.
While there is a 50 per cent probability for the Bank of England to raise interest rates too before the end of the year, markets are expecting the central bank to strike a dovish stance after recent soft data and comments from policymakers.
Yellen and other Fed officials have frequently dismissed the idea of using a single rule, saying it is not flexible enough to adjust to changing circumstances in the economy, and the Fed's report has a special section focused on the topic.
Iraqi PM formally declares victory
Thousands of civilians were estimated to have been killed in the fight for Mosul, according to Nineveh's provincial council. Amnesty also documented abuses by IS, including forced displacement, summary killings and using civilians as human shields.
Forecasters are divided on whether the central bank will raise rates, but data from the overnight index swaps market shows that money markets are nearly fully priced for an increase, while an 80 per cent chance of a second hike has been implied by December.
"It's something that hasn't been an issue so far", she said.
"Yellen's comments suggest the Fed is no hurry to hike rates further and that any further moves are likely to be measured", said Orlando Green, European fixed income strategist at Credit Agricole.
She might be hard to reach Thursday: She's scheduled to testify again before the Senate Banking Committee.
The government reported Friday that employers added a bigger-than-expected 222,000 jobs in June, the most in four months.
Placing more men's matches on show courts is not favouritism - Wimbledon chief
Meanwhile, Gilles Muller plays Marin Cilic first on Court One, before Thomas Berdych faces Novak Djokovic. Andy Murray has recorded a straight-sets victory over Benoit Paire to reach the Wimbledon quarter-finals.
But Ms Yellen said the positive signs in the economy should spur continued consumer spending and business investment, which in turn should foster "a stronger pace of wage and price increases".
But Yellen cautioned that "considerable uncertainty always attends the economic outlook". Her prepared remarks are set to be released at 8:30am. Unfortunately, for some time the Fed. have had little to add to their dialogue as economic they have relentlessly assured markets they remain committed to tightening and the fundamentals of the United States economy remain strong.
Yellen considered the risks of faster or slower growth than the Fed now expects as roughly equal.
The Fed's "Monetary Policy Report", presented twice a year, cited a number of reasons to be optimistic about the economy.
And "there are many considerations these rules do not take into account", she said. She's likely to stick to her position that the USA economy is recovering, having raised interest rates last month.
South Korea Disputes North's Claim of Long-Range Missile Test
Some high-ranking officials of the Trump government have indicated that Washington could take military action against North Korea. He also noted that the North Korea wanted direct talks with the United States , adding China is helping this dialogue.
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