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By Bloomberg

Gold dropped to the lowest level in almost two weeks as prospects for U.S. interest rate increase helped to push the dollar to a one-month high, curbing demand for the metal. Silver and platinum declined.

Bullion for immediate delivery retreated as much as 0.9 percent to $1,195.32 an ounce, the lowest since May 13, before trading at $1,196.54 at 3:14 p.m. in Singapore, according to Bloomberg generic pricing. Prices in Shanghai fell for a third day.

Gold pared gains this year amid speculation the U.S Federal Reserve may raise rates this year for the first time since 2006. Accelerating inflation and jobs growth are pushing the economy close to the point where it can support higher rates, Fed Bank of Cleveland President Loretta Mester said in an interview, while Fed Vice Chairman Stanley Fischer said the process will be determined by data, not date. Higher rates hurt gold as it generally offers returns only through price gains.

“Raising rates now would be to invoke huge market volatility,” Howie Lee, an investment analyst at Phillip Futures Pte. in Singapore, said in an e-mail. “The Fed will want to see three months of solid data before raising rates.”

The outlook for higher rates in the world’s largest economy helped to lift the dollar, which has added 18 percent since July 1 against a basket of 10 leading currencies. The Bloomberg Dollar Spot Index rose 0.5 percent to a one-month high on Tuesday.

Gold for August delivery declined 0.7 percent to $1,196.90 on the Comex in New York. Bullion of 99.99 percent purity decreased 0.3 percent to 239.80 yuan a gram ($1,201.78 an ounce) on the Shanghai Gold Exchange.

Silver for immediate delivery sank 1.9 percent to $16.8452 an ounce. Platinum lost 1.3 percent to $1,137.15 an ounce, while palladium dropped 0.7 percent to $783.21 an ounce.