Gold Prices Falls to 3-Month Below $1,200 as Dollar Soars After Yellen Comments

Gold Prices Falls to 3-Month Below $1,200 as Dollar Soars After Yellen Comments

Prices of gold futures tumbled on Monday, falling below $ 1.200 key level for the first time since February 2016 as the dollar hit a one-month high against the yen after the president of the Federal Reserve of the United States, Janet Yellen, said the central bank may raise the interest rates over the coming months.

Gold for June delivery on the Comex Exchange sank to a session low of $1,199.00 a troy ounce, a level not seen since February 17.

Spot gold had dropped 0.5 percent to $1,205.70 per ounce. Bullion touched a low of $1205.50 earlier in the session, its lowest since Feb. 22.

In declarations made during an appearance at Harvard University Friday afternoon, President of the Federal Reserve, Janet Yellen, said that a rate rise in the coming months “it would be appropriate,” if the economy and the employment market continue to improve.

Operators are now pricing a 28% chance of a rate hike in June and 60% in July, according to CME Group (NASDAQ: CME) Fedwatch tool. September odds were about 68%.

Yellen’s comments raised the US Dollar at its highest level in more than than two months high against a basket of leading currencies. One US dollar stronger usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and expensive raw materials denominated in dollars more expensive for holders of other currencies.

The hedge funds and money managers reduced their bullish bets in futures and options US gold to its lowest level in nearly two months after the Federal Reserve indicated it could raise the interest rates pose as early as June , data showed on Friday.

US economic growth It decelerated in the first quarter, although not as sharply as initially intended, as an increase in housing construction and constant accumulation of inventories partially counterbalance the drag of a sharp drop in corporate investment.

The recent flow of gold from Britain via Switzerland to Asia was reversed in March and April, after a change in expectations US rate hikes spurred investment in London, Swiss customs data show.

Gold for delivery in far-month August was trading lower by Rs 115, or 0.40 per cent, to Rs 28,726 per 10 gram on weak global cues.

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