Gold futures fell to a two-week low as the dollar strengthened amid speculation that the Federal Reserve will raise interest rates this year.
The Bloomberg Dollar Spot Index climbed to a one-month high, cutting demand for the precious metal as an alternative. Accelerating inflation and jobs growth mean the “time is near” for a U.S. rate increase, Fed Bank of Cleveland President Loretta Mester said Monday.
Gold swung between year-to-date gains and losses more than 10 times in 2015, gyrating as traders tried to gauge when policy makers are likely to raise interest rates. Higher rates drive investors to favor assets that pay interest, including new bonds, curbing the appeal of gold, which generally offers returns only through price gains.
Gold futures for August delivery declined 1.3 percent to $1,188.80 an ounce at 9:49 a.m. on the Comex in New York, after touching $1,185.90, the lowest since May 12.
Prices dropped 1.7 percent last week. U.S. inflation rose more than forecast in April, government figures showed Friday, and Fed Chair Janet Yellen said the same day it would be “appropriate” to raise borrowing costs this year if the economy improves.
Silver futures for July delivery declined 1.4 percent to $16.815 an ounce, headed for the biggest drop in a week.
Source : Bloomberg