Gold fell more than 1 percent on Wednesday as a rally in assets seen as higher risk, such as equities, prompted some investors to cash in gains sparked the previous day by Fed chair Janet Yellen's cautious tone on further rate hikes. Yellen's comments, which had sent gold up nearly 2 percent, signalled interest rates will likely rise only gradually and reassured gold investors, as higher rates boost the opportunity cost of holding non-yielding assets like bullion.
The metal remains on track for its best quarter in nearly 30 years, up 15.6 percent, after prices rallied sharply earlier in the year as worries about economic growth, particularly in China, shook up stock markets. Consequent demand for safe havens, combined with receding expectations for US Federal Reserve rate hikes, have driven gold up more than 16 percent since January, making this its strongest quarter so far since the third quarter of 1986.
Spot gold was at $1,227.14 an ounce by 2:48 pm EDT (1848 GMT), down 1.2 percent. US gold futures settled down $8.90 an ounce at $1,228.60. "Safe-haven demand for gold appears to be easing, despite a somewhat softer US dollar," said Rob Haworth, senior investment strategist at US Bank Wealth Management. Among other precious metals, silver was down 0.6 percent at $15.24 an ounce, platinum was down 0.2 percent at $965.11 an ounce and palladium was down 2 percent at $562.22 an ounce.
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