By Brijesh Patel
(Reuters) – Gold prices fell on Wednesday as the dollar rose after minutes from the U.S. Federal Reserve’s latest policy meeting showed policymakers backed more interest rate hikes to tame inflation.
Spot gold was down 0.5% at $1,825.60 per ounce, as of 02:32 p.m. EST (1932 GMT).
U.S. gold futures settled 0.1% lower at $1,841.50 per ounce.
Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion.
“The minutes did support the idea the Fed could stay hawkish a little while longer and can stay on cruise control with tightening until they really see inflation come down,” said Edward Moya, senior market analyst at OANDA.
“Post minutes we saw the dollar kind of extended its rally a little bit and probably we are going to see still further upward pressure on yields, keeping gold under pressure.”
‘Almost all’ Fed officials backed quarter-percentage-point hike and noted the risks of high inflation remained a “key factor” shaping monetary policy and warranted continued rate hikes, according to the minutes from the Jan. 31-Feb. 1 meeting.
The dollar rose rose 0.3% to a near one-week peak against its rivals, making gold more expensive for other currency holders. [USD/]
Traders of futures tied to the Fed’s policy rate on Wednesday largely stuck to the view the central bank will keep hiking a quarter of a point at its next three meetings.
Earlier in the day, St. Louis Fed President James Bullard said the U.S. central bank needs to get inflation toward its 2% goal this year to avoid its prolonged impact.
Among other precious metals, spot silver fell 1.6% to $21.48 per ounce and platinum gained 0.4% to $946.44. Palladium dropped 2.6% to $1,486.72 per ounce.
(Reporting by Brijesh Patel in Bengaluru; Editing by Maju Samuel, Sherry Jacob-Phillips and Krishna Chandra Eluri)
