Philadelphia Federal Reserve President Charles Plosser says interest rates should rise to 2.5% in the next 12 months, and now gold is dropping on the news.

From MarketWatch:

In a speech to economists from the monetarist school on Friday, Plosser laid out an aggressive plan where the Fed would sell $125 billion of assets for each 25 basis point increase in the funds rate. A slower approach could last 18 months rather than a year, he said. This would require only $67 billion of conditional sales between meetings but the funds rate would rise to 3.5%. Plosser, a voting FOMC member this year, said he did not think this strategy would disrupt markets.

This indicates that the Fed may be gearing up to reverse monetary policy faster than once thought, conducting asset sales at the same time as it raises interest rates.

Gold is now at $1427, a little bit off its lows. Silver is down too, and the dollar is way higher.