Gold fell for a second straight session on Wednesday, slipping further away from a 15-month high as the dollar steadied after recent sharp losses and as two Federal Reserve officials talked up US interest rate hikes this year.
Spot gold had eased 0.3 per cent to $1,281.41 an ounce by 0328 GMT, after dropping 0.4 per cent in the previous session. US gold futures dropped 0.7 per cent to $1,283.40, falling for a second straight session after a six-day rally.
Earlier this week, gold had climbed to $1,303.60, its highest since January 2015, after the dollar slumped against the yen.
“The difficulty gold is experiencing in staying above $1,300 does not necessarily mean the bull rally is ending. But the rally may be tired and in need of consolidation. This can trigger profit-taking,” said HSBC analyst James Steel.
The dollar index, which measures the greenback’s strength against six major currencies, rose as much as 0.3 per cent on Wednesday, extending gains to a second day.
The yen backed off from an 18-month high against the dollar on Wednesday, having lost some steam as position squaring set in after its sharp rally since last week.
The United States could see two further interest rate rises this year, Atlanta Fed President Dennis Lockhart had said on Tuesday.
San Francisco Fed President John Williams had said on Tuesday that he would support an interest-rate hike in June as long as he sees continued progress on the economy, inflation and jobs.
Gold prices have gained 21 per cent since the start of the year on the outlook that the Fed has slowed its expected pace of rate increases. Bullion is sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion.
The recent rally in prices has prompted investors to pour money into gold funds. Assets of SPDR Gold Trust, the world’s top gold-backed exchange-traded fund, rose to their highest since December 2013 on Monday.