Gold fell below $1,200 for the first time since mid-February on Monday, as comments from Federal Reserve Chief Janet Yellen on the likelihood of higher U.S. interest rates sent the dollar to two-month highs.
The Fed should increase interest rates in the coming months if the economy picks up, Yellen said on Friday, bolstering the case for a rate hike in June or July. St. Louis Fed President James Bullard said on Monday global markets appeared to be "well-prepared" for a summer rate hike.
An increase in U.S. rates would raise the opportunity cost of holding gold, which does not earn interest. It would also bolster the dollar, making gold more expensive for holders of other currencies. Longer term, however, negative interest rates should boost gold, said John Ciampaglia, executive vice-president of corporate development for Sprott.