Gold dropped to its lowest in over 10 months on Thursday as the dollar surged to its highest in 14 years after the US Federal Reserve raised interest rates for the first time in a year and signalled more rate hikes in 2017. Spot gold had edged down 0.2 percent to $1,142.06 an ounce by 0633 GMT after earlier touching its weakest level since Feb. 3 at 1,134.71. It fell over 1 percent the session before.
US gold futures declined 1.7 percent to $1,143.70 per ounce. They earlier marked their lowest since Feb. 1 at $1,136.40. "The outlook for gold is not particularly great. The more hawkish comments from the Fed are clearly a headwind in the short-term," said ANZ analyst Daniel Hynes.
"The selling seen this morning is just the start of things to come. Certainly the environment is difficult for gold given the appreciation in the dollar." "Given that (gold) prices have now crumbled, it remains to be seen if we reach our downside target of $1,125," INTL FCStone analyst Edward Meir said in a note. Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have fallen about 10 percent since November. Holdings declined again on Wednesday by 0.80 percent to 849.44 tonnes.