New York/London: Gold prices fell to four-month lows on Wednesday, extending losses for a third session as Federal Reserve Chair Janet Yellen said the U.S. central bank remains on track to raise interest rates this year.
In testimony prepared for the U.S. House of Representatives` Financial Services Committee, Yellen said the labour market is expected to improve steadily, and that turmoil abroad is unlikely to throw the U.S. economy off track.
That knocked gold to a low of $1,143.43 an ounce, its weakest since mid-March.
"Impending rate hikes, reiterated by Yellen lately in the midst of the global deflationary environment, noting yesterday`s disappointing retail sales, appears to be a primary pressure factor on gold," said Mike McGlone, director of research for ETF Securities in New York.
Spot gold was down 0.6 percent at $1,148.51 an ounce at 2:09 p.m. EDT (1809 GMT), while U.S. gold futures for August delivery settled down 0.5 percent at $1,147.40 an ounce.
U.S. stock prices held steady, while the dollar <.dxy> rose 0.6 percent against a basket of currencies, pressuring gold, which is priced in the dollar. [.N] [USD/]
"Yellen confirming that the Fed will raise interest rates later this year is nothing new, but nevertheless this helped the dollar to appreciate, which is weighing on the gold price," Commerzbank analyst Daniel Briesemann said.
"We`ve also had better-than-expected economic data out of the United States, both before and after Yellen`s words, so that is also supporting the dollar."
Data released on Wednesday showed U.S. producer prices rose more than expected in June, and that factory activity rebounded in New York state this month.
Yellen was scheduled to deliver her second day of testimony on Thursday, this time to the Senate Banking Committee.
European shares steadied at three-week highs, with investors focussing on a crucial vote in Greece over a proposed bailout package to save the country from bankruptcy. [.EU]
"Greece developments have not had a bullish impact on gold but further glitches in the Greek debt relief process could lend modest support to prices," HSBC said in a note.
The value of New York`s SPDR Gold Trust , the largest gold-backed exchange-traded fund, fell as low as $109.58 per share on Wednesday, the lowest since March 2010.
Among other precious metals, silver was down 1.5 percent at $15.12 an ounce, platinum was down 0.5 percent at $1,018.49 an ounce and palladium was up 1.4 percent at $640.75 an ounce.
