Gold fell nearly $3 an ounce in Asia on Friday after the US Federal Reserve raised interest rates as expected and signalled further increases ahead, which could diminish gold's appeal as an alternative asset. Spot gold was at $434.50/435.00, down from $437.20/437.90 an ounce last quoted in New York on Thursday, but well above a key support of around $432 an ounce.
Other precious metals were mixed, with platinum falling around $2 an ounce on persistent fund selling, having touched a 14-month high at $898 an ounce last week.
Gold has seen volatile trade in the past week, falling to a 2-week low of $433.50 an ounce on Wednesday only a few days after it rose to a 3-month high of $443.60 on fund buying.
Some dealers remained bullish, saying gold could hit previous highs of $445-$450 when fund managers returned to the market after taking profits.
Others were more cautious. "It's probably a sideways pattern, providing we hold above $430 or somewhere around there," said Martin Mayan, associate director at N M Rothschild in Sydney.
"I wouldn't use 'bullish' personally, but it is sort of sideways. Again, it's a dollar and interest rate related story."
The dollar was quoted at around 110.90 yen, after hitting a 9-month high of 111.13 yen.
The euro was lower than New York's levels at around $1.2067. Rising interest rates tend to boost the dollar and weigh on gold because it makes dollar-priced gold more expensive for holders of other currencies.
The Federal Open Market Committee raised the federal funds rate by a quarter point to 3.25 percent, the ninth consecutive increase since June last year.
The physical gold market was slow because of a holiday in Hong Kong and dealers also expected a quiet day in Europe because of Friday's shortened session in New York's Comex ahead of Monday's US Independence Day holiday.
Premiums for gold bars were zero to London spot prices in Hong Kong, a key bullion trading centre in East Asia. Platinum was at $878/883 an ounce, versus $880/883 last quoted in New York.
Sister metal palladium was at $180/185 an ounce, versus $181/184. Some dealers said fund selling could push platinum prices down to as low as $865 an ounce.
They expected platinum to trade in a wide range of $860-$900 an ounce in the next few weeks, in which fresh demand from jewellers and automakers could emerge at around $870 an ounce.
Some dealers in China, the world's largest consumer of platinum jewellery, said high prices had discouraged jewellers from stocking up.
"There's not much change in China.
Fabricators are not stocking up because platinum prices are very high," said one dealer in Shanghai. Spot silver was trading at $7.03/7.05 an ounce, up from $7.02/7.05 last quoted in New York.