Gold slumped to a near-six-year low on Thursday after comments from Federal Reserve chair Janet Yellen virtually cemented the case for a US rate hike this month, while the strength in the dollar also pressured the metal. Spot gold fell to $1,045.85 an ounce, the lowest since February 2010, before steadying at $1,052.35 by 0643 GMT. US gold futures slid to $1,045.40, the lowest since October 2009.
Fed Chair Yellen said on Wednesday she was "looking forward" to a US interest rate rise that will be seen as a testament to the economy's recovery from recession. Yellen expressed confidence in the US economy, saying job growth through October suggested the labour market was healing even if not yet at full strength.
"The market took these comments as a good indication that the Fed would raise rates at the next FOMC meeting later this month," said HSBC analyst James Steel, said referring to the Fed's Federal Open Market Committee. A rate hike in December, widely expected in the market, would be the first in nearly a decade. Gold, as a non-interest-paying asset, would not benefit from higher rates.
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