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The rout in commodities deepened with prices heading for the lowest close since 2002 as the prospect of higher U.S. interest rates sent gold tumbling.

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If gold prices remain below $1,100 for a prolonged period, analysts warn that more mine closures are inevitable.





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Raw materials are losing favour with investors as the dollar gains amid signals from Federal Reserve Chair Janet Yellen that the central bank may raise rates this year on the back of an improving U.S. economy. Higher borrowing costs curb the attractiveness of commodities such as gold, which doesn’t pay interest or give returns like assets including bonds and equities.

The Bloomberg Commodity Index dropped as much as 1.1 per cent, falling for a fifth day in the longest stretch of declines since March. Gold futures sank to the weakest in more than five years while industrial metals, grains, Brent crude and U.S. natural gas also slid as a measure of the dollar climbed to the highest since April 13.