Gold prices slipped on Wednesday, as the dollar and U.S. Treasury yields climbed to multi-year peaks after hawkish rhetoric by Federal Reserve officials fuelled expectations of aggressive interest rate hikes.
Spot gold was down 0.3% at $1,624.12 per ounce, as of 0404 GMT, edging closer to a 2-1/2-year trough of $1,620.20 touched earlier this week.
U.S. gold futures was 0.3% lower at $1,631.60.
"The backdrop has been greater rate-hike expectations, the pricing in of a more hawkish Fed, a strong U.S. dollar and higher real interest rates on the back of that ... None of that bodes well for gold," said Ilya Spivak, a currency strategist at DailyFX, adding $1,600 is the next big inflection point for the precious metal.
The dollar index scaled a fresh two-decade peak, making greenback-priced bullion more expensive for buyers holding other currencies.
Benchmark U.S. 10-year Treasury yields rose to 4% for the first time since 2010.
Chicago Fed President Charles Evans, St. Louis Fed President James Bullard and Minneapolis Federal Reserve Bank President Neel Kashkari echoed the U.S. Fed's pledge to focus on tackling soaring inflation.
Evans said the U.S. central bank will need to raise interest rates to a range between 4.50% and 4.75%.
Though gold is seen as a hedge against inflation and economic uncertainties, rate hikes have dented non-yielding bullion's appeal and pushed the dollar to multi-year highs.
According to a Reuters poll, the Fed will hike its key interest rate to a much higher peak than predicted two weeks ago.
Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.28% to 940.86 tonnes on Tuesday from 943.47 tonnes on Monday.
Elsewhere, spot silver hit a three-week low and was last down 1.4% at $18.17 per ounce.
Platinum fell 0.7% to $842.52, having earlier hit its lowest level since Sept. 5.
Palladium shed 1.2% to $2,061.31.
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