Gold prices dipped on Thursday, under pressure from a stronger US dollar, although tensions between Britain and Russia limited the precious metal's decline a day after it hit a one-week high. The dollar rose versus a currency basket as traders, awaiting next week's Federal Reserve meeting, eyed data that showed the number of Americans filing for unemployment benefits fell last week.
Moscow said it would retaliate against London's move to expel 23 Russian diplomats over a nerve toxin attack on a Russian former double agent in Britain. Spot gold was down 0.5 percent at $1,317.52 per ounce by 1:40 pm EST (1740 GMT), edging away from Wednesday's one-week high, while US gold futures for April delivery settled down $7.80, or 0.6 percent, at $1,317.80 per ounce.
"The headwinds gold faces are people starting to talk about the interest rate increase and the possibility of a fourth interest rate hike," said Chris Gaffney, president of world markets at EverBank. Gold is highly sensitive to rising US interest rates, because it becomes less attractive to investors since it does not bear interest. A stronger dollar makes dollar-priced gold costlier for investors using other currencies.
"Gold is finding support from the escalating political crisis between the UK and Russia," Commerzbank said in a note, but added it could face headwinds after the US president's new economic adviser Larry Kudlow had spoken out in favor of a strong dollar. Silver fell 0.5 percent at $16.42 per ounce after seeing a 9-day low of $13.35. Platinum fell 0.7 percent at $951.49 per ounce. Palladium dropped 0.4 percent at $983.20 per ounce after hitting $1,006.30 in the previous session, a high since March 1.
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