Gold near-six-year low: Know why

Singapore: Gold languished close to a near-six-year low on Thursday after comments from Federal Reserve chair Janet Yellen boosted expectations of a US rate hike this month, while the strength in the dollar also weighed on the metal.

FUNDAMENTALS

* Spot gold fell 0.2 percent to $1,050.80 an ounce by 0047 GMT. It dipped to as low as $1,050.25 in the previous session, the lowest since February 2010.

* Fed Chair Yellen said on Wednesday she was "looking forward" to a U.S. interest rate rise that will be seen as a testament to the economy`s recovery from recession.

* In her remarks to the Economic Club of Washington, Yellen expressed confidence in the U.S. economy, saying job growth through October suggested the labour market was healing even if not yet at full strength.

* Though she made no explicit reference to rising rates in December, markets read her comments as supportive of the first U.S. rate hike in nearly a decade at the U.S. central bank`s policy meeting later this month.

* Gold, as a non-interest-paying asset, would not benefit from higher rates.

* Following her comments, the dollar jumped to its highest in 12-1/2 years against a basket of major currencies on Wednesday, while equities fell.

* U.S. gold futures slid to $1,049.40 on Wednesday, the lowest since October 2009. Silver, platinum and palladium also followed gold lower.

* Investors are rapidly pulling out of bullion funds.

* SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, said its holdings fell 2.41 percent to 639.02 tonnes on Wednesday, the lowest since September 2008.

* The Wednesday outflow is the biggest single-day percentage drop in four years.

* Elsewhere, a senior Indian government official floated the idea this week of setting up a national gold exchange to overhaul physical trade in the world`s second-biggest bullion market.

* CME Group Inc`s executive director for metals products, Harriet Hunnable, will leave the company later this month, a CME spokesman said on Wednesday.