Gold drops, hit by Yellen remarks, but still up for week

25-Sep (MarketWatch) — Gold futures slumped Friday, hurt by the Federal Reserve’s Janet Yellen saying the economy is improving and she expects an interest-rate hike in 2015.

December gold fell $10.20, or 0.9%, to $1,143.60 an ounce, while December silver dropped 7 cents, or 0.5%, to $15.06 an ounce.

The yellow metal is trading lower after “Fed Chair Yellen more or less announced during a speech yesterday evening that an interest rate hike would be forthcoming before the year is out,” said commodities analysts at Commerzbank in a note Friday.

Analysts have said that higher interest rates can hurt gold because it doesn’t pay interest, making it a less attractive investment. Plus, higher rates lift the dollar and a stronger greenback can weigh on dollar-denominated commodities as they become pricier for holders of other currencies. The dollar rose early Friday.

Gold, which has pared its weekly gain to 0.5%, had rise on Wednesday and Thursday thanks in part to safe-haven demand as stocks and other riskier assets slumped. On Friday, U.S. stocks looked on track to open sharply higher, helped by Yellen’s remarks.

[source]