Gold prices fell to a three-month low on Thursday as hints of further interest rate hikes by the US Federal Reserve bolstered the dollar.
Spot gold fell 0.5 percent to $1,933.89 per ounce, hitting its lowest since March 17. US gold futures dropped 1.2 percent to $1,945.70.
The Fed, in new economic projections, signaled that a stronger-than-expected economy and a slower decline in inflation will result in a likely rise in borrowing costs by another half-a-percentage point by the end of this year.
“Expectations of two more rate increases have weighed on gold and prices could see more selling pressure, with next support seen at the $1,920 level,” said Brian Lan, of Singapore dealer GoldSilver Central.
“Fed has more or less given the market a direction” as prices were swaying in a certain range, he added.
The US dollar index climbed, making bullion more expensive for those holding other currencies.
Traders are now pricing in a roughly 69 percent chance of Fed rate hike in July, according to the CME Fedwatch tool.
“We are also entering a seasonally slow period for physical demand, suggesting gold prices are more likely to drift lower in coming sessions barring a sharp slowdown in US economic data which could spur interest in the gold market,” Standard Chartered analyst Suki Cooper said.
