Gold slumps to lowest level since February on Fed rate outlook

[SINGAPORE] Gold sank to the lowest level since February after Federal Reserve Chair Janet Yellen said the improving US economy meant another interest-rate hike would probably be in order "in the coming months", pushing the dollar to the highest since March.

Bullion for immediate delivery fell as much as one per cent to US$1,200.03 an ounce, the cheapest since Feb 17, before trading at US$1,202.09 by 10:11 am in Singapore, according to Bloomberg generic pricing. Prices are down for the ninth day, the worst run in more than a year, and are heading for the biggest monthly loss since 2013.

Ms Yellen affirmed what a number of her officials had said last week, that evidence of strength in the US economy meant tighter monetary policy could now be considered. Bets on a rate hike remain at 30 per cent for June and the odds are even for an increase in July, with data Friday showing US growth picked up more than was previously estimated in the first quarter. The US dollar spot index climbed 0.2 per cent on Monday.

BLOOMBERG