Gold Prices Briefly Drop Below $1,200 on Yellen Comments

Gold prices briefly dipped below $1,200 per ounce on Monday following comments from US Federal Reserve Chair Janet Yellen.
Yellen indicated that a hike in interest rates could be on the horizon sooner than expected, due to renewed strength in the US economy. She stated that interest rates could increase “in coming months,” according to Reuters, while James Bullard of the St. Louis Fed stated that markets looked to be prepared for a rate hike.
Gold fell as low as US$199.80 per ounce during Monday trading hours, but was back up to $1,204.90 per ounce as of 4:17 pm. EST. A stronger US dollar also put pressure on the gold price on Monday.

Market watchers were not expecting an interest rate hike earlier this year, but that has changed in the past month. As per the Wall Street Journal, market watchers put the probability of the fed raising interest rates in June at 4 percent in early May, but that number has now risen to 28 percent. And according to a more recent article from Bloomberg, bets on a rate hike in June are now up to 34 percent.
“The key risk for me now is not whether they will hike once, but actually whether they will hike twice: as a house, we believe they will hike twice in September and December,” Wayne Gordon of UBS Wealth Management told the news agency.
Gold prices have been on a downtrend since late April, but are still up 13 percent year-to-date.
The next Federal Reserve meeting will take place on June 14-15.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.