Gold extends losses on Yellen rate remarks
New York (Feb 24) Gold slid below $1,200 an ounce on Tuesday, extending earlier losses after Federal Reserve Chair Janet Yellen said there was no need to hike interest rates over the next few months.
Gold had fallen earlier following news the euro zone's finance ministers approved Greece's new bailout plan, after Athens submitted reform proposals in the 11th hour.
Spot gold was down $6.30 at $1,194.50 an ounce, while U.S. gold futures for April delivery fell $5 an ounce to $1,195.80.
European shares rose on Tuesday and Greek shares outperformed after a list of proposed reforms submitted by Greece was received favorably by the European Commission.
Investors are keen to see if she will echo the minutes of the Fed's January meeting, when policymakers expressed the view that raising rates too soon could hold back the U.S. recovery.
Speculation that the Fed is poised to increase rates has weighed on gold over the past year. Such a move would lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which the metal is priced.
Expectations for a rate rise have led to months of dollar strength, lifting it to an 11-year high against a basket of currencies in January.
Gold rose in spite of this as concerns over the euro zone economy grew after the anti-bailout Syriza party won a snap election in Greece. The metal is now losing ground as markets digest the prospect of Greece gaining a financial rescue deal, which could soften demand gold as a haven from risk.
"At least in the near-term, an agreement would be negative for gold," HSBC said in a note.
A number of major Asian gold markets, most notably China, remained closed for the Lunar New Year break, removing key support for gold prices, dealers said.
Among other precious metals, silver was down 0.3 percent at $16.24 an ounce, while platinum slipped by 0.2 percent to $1,158.55 and palladium fell 0.2 percent to $783.15.