Gold dropped for a second straight session on Monday, slipping further from a three-week high, as the dollar climbed after Federal Reserve Chair Janet Yellen signaled the U.S. central bank may be on course to raise interest rates later this year.
Bullion may be set to give up recent gains fueled by the Fed’s March policy statement that it was prepared to move more slowly in hiking U.S. rates than the market expected. The metal rose for seven consecutive sessions after the Fed’s meeting this month in its longest rally since 2012.
On Friday, Yellen said an increase in the Fed’s benchmark rate “may well be warranted later this year” given sustained improvement in U.S. economic conditions.
“Yellen’s latest comments might just change the course of gold and cause a downward movement in the price from hereon,” said Howie Lee, analyst at Phillip Futures, who sees gold dropping to as low as $1,180.
Spot gold fell as much as 1 percent to $1,186.75 an ounce and was off 0.9 percent at $1,188.65 by 0732 GMT. It touched $1,219.40 on Thursday, its loftiest since March 2.
Bullion is headed for a second consecutive monthly drop in March as a looming U.S. rate hike dims the appeal of a non-interest bearing asset.
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