Fed's Yellen drops gold price to two-month low

San Francisco (May 27)  On Friday, gold continued its slide after data out of the US showed  the world's largest economy is growing faster than previously estimated and Federal Reserve chair Janet Yellen suggested an early interest rate hike may be appropriate.

In heavy early afternoon trading gold futures in New York for delivery in June dropped to a day low of $1,209.50 an ounce, levels last seen April 1. The gold price is down more than $90 per ounce in the month of May and is in the midst of its longest unbroken losing streak since late November .

Sentiment on gold markets have shifted dramatically in recent weeks and Yellen was uncharacteristically hawkish during a debate at Harvard University on Friday ahead of a long weekend in the US. Yellen echoed similarly aggressive comments by her colleagues on the Fed's rate-setting committee, saying a rate rise during the summer months is probably appropriate.

Yellen's comments caused a spike in government bond yields and boosted the dollar which usually move in the opposite direction of the gold price. Higher interest rates raises the opportunity costs of holding gold as the metal provided no yield and any gains for investors must come through price appreciation.

By 2:30pm EST spot gold was down $11 to $1209, while spot silver shed 8 cents to $16.14.  However, platinim plummeted $16 to $976 as palladium crashed neartly 2% to $536.

Source: Mining.com