Gold fell more than 2 percent to a 9-1/2-month low on Wednesday as a buoyant dollar extended its rally to the highest since 2003 on the back of upbeat US economic data that further cemented a case for increasing interest rates next month. Bullion prices remained weak after minutes from the Federal Reserve's November 1-2 meeting showed policymakers appeared confident that the economy was strengthening enough to warrant interest rate increases soon.
Spot gold dropped 1.9 percent at $1,188.82 an ounce by 2:34 pm EST (1934 GMT), after falling 2.5 percent to $1,181.45, the lowest since February 10. US gold futures settled down 1.8 percent at $1,189.30. Many in the United States will be away from their desks on Thursday for the Thanksgiving Day holiday.
"The November Fed minutes contained little market-moving information which puts all the emphasis on (Fed Chair Janet) Yellen's December press conference and FOMC dot plot for clues on the future path of short term interest rates," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced. Traders are pricing in a 100 percent chance of a December rate increase, according to the CME Group's FedWatch Tool. Silver fell by as much as 3 percent to $16.14 an ounce, its lowest since early June. Platinum shed 1 percent at $927.40 and palladium dropped 0.5 percent at $736.50.
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