US gold futures nosed lower on Wednesday as traders digested another increase in short-term interest rates by the US Federal Reserve along with a hint of more tightening to come, dealers said.
Palladium shed 2.4 percent on concerns about ample metal supplies from Russia, and platinum also sagged, but silver rose to within sight of Monday's 22-year high on investor buying.
By 10:16 am EST, gold for April delivery on the New York Mercantile Exchange's COMEX division slipped $1.60 to $565.40 an ounce, in a range of $560.20 to $567.50.
Liquidation dragged gold further off Monday's three-week peak as traders felt the US central bank will raise rates again in May, which tends to lift the dollar and pressure gold.
The Federal Open Market Committee, meeting for the first time under new Fed Chairman Ben Bernanke, lifted the federal funds rate by a quarter percentage point to 4.75 percent and said further moves may be needed to keep inflation at bay. Bargain hunting near $560 an ounce offered some support, but prices need to get above stiff resistance at $570 to retest February's 25-year high of $579.50, dealers said.
Investor profit taking hit gold overnight at the Tokyo Commodities Exchange before book closings on Friday for the end of Japan's financial year. It dipped in European trade too. But analysts said that, longer term, gold still might go higher.
"Despite the potential impact higher US interest rates will have on gold, it is still well placed to test February's 25-year high of $575 as improving supply/demand fundamentals and the metal's anti-inflationary/safe-haven properties draw investors toward gold and the other precious metals," said TheBullionDesk.com.
Spot gold edged to $565.90/566.80, up from Tuesday's late New York quote of $564.35/565.20. Wednesday's afternoon fix in London by bullion dealers reached $565.
Silver traders felt the metal's price had the potential to hit $11 an ounce on high hopes of a launch of a US investment vehicle to be backed by silver bullion. May delivery silver gained 3 cents to $10.90 an ounce, dealing from $10.745 to $10.9050.
Spot silver rose to $10.89/10.92, versus Tuesday's 22-year high of $10.93 and a late quote at $10.84/10.87. Wednesday's London fix was at $10.8750.
At NYMEX, June palladium tumbled $8.35 to $333.90 an ounce, after hitting a two-year high Tuesday at $346. Spot palladium fell to $330/334. April platinum lost $10.20 to stand at $1,064.10 an ounce. Spot platinum sagged at $1,065/1,069.
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