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PRECIOUS-Gold at 3-month low after Yellen hints at possible rate hike

* Gold on track for biggest weekly decline since November
    * Fed Chair Yellen's comments lift U.S. dollar, push gold
lower
    * Platinum and silver prices reach multi-week lows

 (Recasts following remarks by Federal Reserve chief Yellen;
updates prices; adds comment, second byline, NEW YORK dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, May 27 (Reuters) - Gold slid 1 percent to a
three-month low on Friday, extending losses after Federal
Reserve Chair Janet Yellen indicated the U.S. central bank could
raise interest rates within months if the economy continues to
improve, boosting the dollar.
    "The economy is continuing to improve ... growth looks to be
picking up," Yellen said in remarks in Boston. "If that
continues and if the labor market continues to improve, and I
expect those things to occur ... in the coming months such a
move would be appropriate." 
    The remarks lifted the U.S. dollar index to a
two-month high. 
    "You couldn't really say it was uber hawkish, but it keeps
the door open for a July hike, and as far as gold is concerned,
that means that there was a bit of a higher cost of carry in
U.S. dollar terms," said Bart Melek, head of commodity strategy
for TD Securities in Toronto.
    Spot gold was down 0.9 percent at $1,208.90 an ounce
at 3:01 p.m. EDT (1901 GMT), off an earlier low of $1,206.45,
the lowest level since Feb. 22. It was on track to close the
week down 3.5 percent, the biggest fall since early November and
the fourth straight weekly decline after minutes of the Fed's
latest policy meeting indicated last week that a rate rise may
be on the cards sooner rather than later.
    An increase in U.S. rates would raise the opportunity cost
of holding gold, while boosting the dollar, in which it is
priced.
    U.S. gold futures for June delivery settled down 0.5
percent at $1,213.80 an ounce.
    "Yellen reinforced the currently prevailing view that a Fed
rate hike in June was clearly on the menu though perhaps not yet
the blue-plate special," said Tai Wong, director of base and
precious metals trading for BMO Capital Markets in New York.
    "The hurdle to a June hike remains formidable with July
favored as Brexit will then be out of the way and the committee
will have seen more data."
    On Thursday, Fed Governor Jerome Powell said he felt the
economy was on a "solid footing" and within reach of the Fed's
inflation goals. 
    Silver touched its lowest level in nearly six weeks
at $16.09, and was later down 0.8 percent at $16.18 an ounce. 
    Platinum was down 1.6 percent at $972.24 an ounce,
after touching its weakest level in over five weeks at $970, and
was on track for its biggest weekly decline since Jan. 15.
Palladium was 1.2 percent lower at $534.05. 

    
 (Additional reporting by Koustav Samanta and Vijaykumar Vedala
in Bengaluru; Editing by and Leslie Adler)
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