Gold hovers above $1,200-an-ounce after Yellen drops heavy hints on rate increases

Gold prices fell Monday, moving in the opposite direction of the U.S. dollar, which soared after comments by Federal Reserve Chairwoman Janet Yellen last week indicated an interest-rate hike could come this summer.

On Monday, gold prices GCN6, -0.12%  dropped $5.50, or 0.5%, to $1,208.80 an ounce. Gold recovered from earlier, sharper losses when it briefly tapped $1,199 an ounce. That was after closing down $6.60 lower to $1,213.80 an ounce on Friday — Yellen’s comments came just ahead of the gold settlement. Prices lost 3% for the week to finish at a three-month low.

The dollar USDJPY, +0.14% meanwhile, rose above ¥111 yen. Higher interest rates or talk of that tends to lift demand for the dollar, which weighs on buyer interest in dollar-priced precious metals. As commodities don’t pay interest, higher interest rates can draw investors out of gold as they seek higher yields.

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