The dollar jumped to three-month highs yesterday, extending its recent gains as expectations of rising US interest rates gathered pace, while gold prices plunged to their lowest in more than five years.
The greenback posted its best weekly performance in about two months last week, after Federal Reserve chair Janet Yellen reiterated that US interest rates will probably rise later in the year.
Data on Friday showing a pickup in US consumer prices and housing starts also helped the rally.
The strength of the dollar weighed on gold, which plunged as much as 4 per cent. Platinum fell as much as 5 per cent to its lowest since February 2009.
Global equities held close to Friday’s three-week highs and European shares approached seven-week peaks.
Gold dived, touching a five-year low as the US interest rate outlook and its consequences for the dollar led sellers in China to dump the metal.
“The Asian market missed the action on Friday when US players were already attempting a break of $1,130, a major support level, and has pushed prices much lower today,” ABN Amro analyst Georgette Boele said.
“Last week was an important week: you got Yellen, a three-month high in the dollar and good US economic data ... there is a chance that we see more downside in coming days.”