Gold fell more than one percent on Wednesday as the dollar hit a new three-week high following minutes of the US Federal Reserve's last policy meeting that bolstered expectations that the central bank could soon raise interest rates. The US central bank will likely raise interest rates next month if economic data points to stronger second-quarter growth as well as firming inflation and employment, according to minutes from the US central bank's April policy meeting.
The indications followed a Fed policymaker's comment on Tuesday he would push for an interest rate hike in June or July, and two other Fed officials, who predicted up to three rate increases this year. Gold is highly sensitive to rising interest rates, which increase the opportunity cost of holding it. Spot gold dipped to a session low of $1,262.45 an ounce after the news and was down 1.28 percent at $1,263.2 by 2:29 pm EDT (1829 GMT), while US gold futures settled down 0.2 percent at $1,274.4.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.56 percent to 855.89 tonnes on Tuesday, the highest since November 2013. Spot silver slipped 1.52 percent to $16.96 per ounce, spot platinum dropped 1.56 percent to $1,032.6 per ounce and spot palladium fell 1.03 percent to $574 an ounce.