Gold turned lower on Tuesday, pressured by the firm U.S. dollar and weak oil prices, and with expectations that the Federal Reserve will increase interest rates this year pushing bullion toward its second monthly decline. Gold has fallen 3 percent since hitting a three-week high last week above $1,200 an ounce after Federal Reserve Chair Janet Yellen on Friday signaled a rate hike could be likely later this year.
Yellen’s remarks on sustained gains in the U.S. economy halted a seven-day rally in bullion,- the longest rising streak since 2012. The gains had been spurred by hopes the Fed would take it slow in raising rates. “Yellen has managed to do a balancing act at the end of the last Fed meeting, on one hand removing the patience language, on the other giving the impression that rates would rise at a more sedate pace than the market initially expected,” Natixis analyst Nic Brown said.
“Our best case scenario is a June rate hike and in the interim there is certainly scope for more weakness in gold.” Spot gold XAU= was down 0.2 percent at $1,185.70 an ounce by 3:16 p.m. EDT(12.46 a.m. IST), while U.S. gold for April delivery GCcv1 settled down $1.70 at $1,184.80 an ounce.