Gold down on Yellen comments

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Thursday as U.S. Federal Reserve Chairwoman Janet Yellen made comments about a possible rate hike.

The most active gold contract for December delivery fell 7 U.S. dollars, or 0.57 percent, to settle at 1,216.90 dollars per ounce.

During testimony before the U.S. Joint Economic Committee of Congress, Yellen told government officials that the Fed could raise rates relatively soon. This put pressure on the precious metal as the Fed's rate hikes generally trigger a rush to more lucrative investments other than gold, as the precious metal is a non-interest-bearing asset.

Investors believe the Fed may raise rates from 0.50 to 0.75 during the December FOMC meeting. According to the CME Group's Fedwatch tool, the current implied probability of a hike from 0.50 to at least 0.75 is at 90 percent at the December meeting and 91 percent for the February meeting.

Gold was put under further pressure as a report on Thursday released by the U.S. Department of Labor showed the consumer price index increasing by 0.4 percent during the month of October, a figure which was on the high end of expectations. Analysts note extensive strength in the price of gasoline, which jumped 7 percent.

A report released on Thursday by the U.S. Census Department also showed housing starts much stronger-than-expected, with starts during the month of October at a 1.323 million level, and permits at a 1.229 million level. Analysts note that this put extensive pressure on the precious metal as this could mean increased expectations for the U.S. gross domestic product report due later this month.

The precious metal was also dampened by the U.S. Department of Labor's weekly jobless claims report released on Thursday showed initial claims falling by 19,000 to a 235,000 level, which analysts note was extremely strong.

All of these reports, combined with Yellen's testimony, make a rate hike during the December FOMC meeting very likely. Investors will still be watching Fed speeches later this week for additional hints, as in addition to Thursday's economic reports, several Federal Reserve officials are scheduled to speak on Friday.

Silver for December delivery dropped 15.5 cents, or 0.92 percent, to close at 16.772 dollars per ounce. Platinum for January delivery fell 1.4 dollars, or 0.15 percent, to close at 945.10 dollars per ounce. Endit