Gold Prices Drop on Yellen Remarks

Gold prices remained under pressure following Federal Reserve Chair Janet Yellen's remarks that supported gradual U.S. interest rate hikes. Spot gold was little changed at $1,203 an ounce. The bullion previously reached an eight-week peak of $1,218.64, however, it dropped one percent in the earlier session as the dollar firmed.

U.S. gold futures were 0.7 percent lower at $1,203.50 an ounce. Several Fed officials were seen supporting the case for a gradual increase in U.S. interest rates. The precious metal extended losses following the latest release of the Fed's Beige Book which indicated a rise in manufacturing and tight labor markets showing upbeat U.S economic health. According to Capital Economics analyst Simona Gambarini, higher rates will likely add pressure to gold, as it is highly sensitive to increasing interest rates which raise the opportunity cost of holding non-yielding bullion.

Prices of Silver were higher as March silver added 0.7 percent to $17.274 per ounce while palladium shed 0.3 percent to $751 per ounce. In ETF trading, the SPDR Gold Trust retreated 0.6 percent while the iShares Silver Trust edged down 0.1 percent.

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