Gold dropped 1 percent to a 5-1/2-month low on Friday and was set for a second week of decline as the dollar soared after comments from the Federal Reserve bolstered expectations that US interest rates would rise next month. Spot gold was down 0.84 percent at $1,205.75 an ounce by 0758 GMT. The metal hit $1,203.86, its lowest level since May 30, earlier in the session.
US gold futures fell 1 percent to $1205.00 per ounce, after touching its lowest since February 10 at $1,201.3 earlier. "Yellen's comments and a stronger dollar have pulled down the entire precious metals complex. Gold will be on a downtrend for now," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.
"People are speculating that Donald Trump's policies will improve companies and equity markets, and lots of them are going to stocks and currencies. Gold has lost a bit of its safe-haven asset status." The bullion has dropped nearly 10 percent from a high of $1,337.40 per ounce, hit on November 9, when Donald Trump was announced US president-elect.
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