Worldwide Monetary Fund (IMF) earlier this month had however advised Federal Reserve against increasing the interest rates this year and keep it between the current 0% and 0.25%.

Spot gold was down 0.4 percent at $1,144.65 an ounce at 2:41 pm EDT (1841 GMT), after falling to the lowest since November at $1,142.10 following Federal Reserve Chair Janet Yellen’s statement on Wednesday that the central bank will likely raise interest rates later this year if the USA economy expands as expected. “Thus, while labor market conditions have improved substantially, they are, in the FOMC’s judgment, not yet consistent with maximum employment”, she said.

YELLEN SPEAKS: Yellen said in prepared remarks to Congress that she sees encouraging signs that the economy is reviving after a harsh winter and, if the improvements stay on track, policymakers will likely start raising interest rates later this year. She added that hikes are likely to happen at a “gradual” pace.

She was optimistic that inflation would continue to inch upward.

Gold came under pressure in the first half of the year from expectations the Fed is set to raise rates for the first time in almost a decade, lifting the opportunity cost of holding gold.

Yellen faced a particularly sharp rebuke from a Republican lawmaker unhappy over the Fed’s refusal to hand over documents subpoenaed by the committee.

But Yellen said on Thursday the Fed should be absolutely sure that quite simple fasten money plan also… She mentioned the problems in Greece and the uncertainties in China, but noted that global economic growth could pick up more quickly than many are expecting.

Lower oil prices, while suppressing inflation, were also expected to have a positive impact on the economy by leaving consumers with more money to spend on other goods and services.

Ten-year Spanish bonds, often seen as a barometer of investor confidence and risk appetite, rose in price to push the yield down to a six-week low of 2 per cent.

Yellen did concede that she did meet with the firm’s senior managing director, Regina Schleiger, in 2012, when she was the Fed Vice-Chair.

“Although our baseline is a December hike, the probability of a September hike remains significant”, Goldman Sachs U.S. economics team said in a note to clients.

Proponents of the measures, however, say additional oversight would strengthen the conduct of monetary policy. Lawmakers in both the House and Senate have introduced legislation to rein in the Fed’s independence, measures that the central bank have warned could damage the independence the Fed needs to maintain its credibility with financial markets.