Gold fell below $1,200 for the first time since mid-February on Monday, as comments from Federal Reserve chief Janet Yellen on the likelihood of higher U.S. interest rates sent the dollar to two-month highs.
The Fed should increase interest rates “in the coming months” if the economy picks up as expected and jobs continue to be generated, Yellen said on Friday, bolstering the case for a rate hike in June or July.
St. Louis Fed President James Bullard said on Monday that global markets appear to be “well-prepared” for a summer rate hike, although he did not specify a date for the policy move.
An increase in rates would raise the opportunity cost of holding gold, which does not earn interest. It would also bolster the dollar, making gold more expensive for other currency holders.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.