Gold prices slid on Monday and hit a two-week low as upbeat comments from Federal Reserve officials on the US economy boosted expectations that the central bank could lift interest rates sooner rather than later. The Fed's No 2 policymaker, Stanley Fischer, said on Sunday the central bank is close to hitting targets for full employment and 2 percent inflation.
That followed comments last week from New York Fed President William Dudley that the labour market is improving, and from San Francisco Fed chief John Williams that waiting too long to lift rates could be costly for the economy. Gold is highly sensitive to rising US interest rates, which boost the opportunity cost of holding non-yielding gold, while lifting the dollar, in which it is priced.
Spot gold was down 0.2 percent at $1,338.01 per ounce by 2:38 pm ET (1838 GMT) after hitting a session low of $1331.35, its lowest since August 9. The most active US gold futures for December delivery settled down $2.8, or 0.21 percent, at $1,343.4 per ounce. "We definitely think the US recovery is on track. Inflation is starting to pick up, employment is pretty much at the natural rate, so everything is coming together to suggest there's a very high probability of a rate hike before the end of the year," Dan Smith, analyst at Oxford Economics, said. Silver hit a seven-week low of $18.77 an ounce and was later down 2.31 percent at $18.84. Platinum was down 1.19 percent at $1,097.25, after falling to its lowest in nearly a month. Palladium was 2.82 percent lower at $688.