Gold slumped on Wednesday, October 18, as the dollar strengthened amid speculation that the next U.S. Federal Reserve chief may be a policy hawk.
Spot gold was down 0.1 percent at $1,283.16 an ounce at 0800 GMT. It hit a one-week low of $1,281.31 on Tuesday.
U.S. gold futures for December delivery were off 0.1 percent at $1,285 per ounce. The dollar edged higher as investors mulled the possibility of a likely hawkish Fed chair.
“All the rhetoric around that is that it’s more hawkish… Just few surprises hitting the market there and helping the dollar regain footing and keeping yields very steady, so reallyputting gold under pressure,” a Hong Kong-based trader said.
Jerome Powell will likely be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll – but most of them said Yellen would be the best option.
The U.S. central bank is widely expected to raise interest rates for the third time this year in December.
Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.
“With dollar strength in mind, it would present further risks to gold, but I am personally waiting to see how the Catalonia crisis unfolds tomorrow, pinpointing a possible next move for gold, in either direction,” said Jameel Ahmad, vice president of market research at FXTM.
Jeffrey Halley, senior market analyst with OANDA, sees immediate support for gold at $1,281 and towards $1,260.
In other precious metals, silver was down 0.2 percent at $16.96 an ounce, after touching a one-week low in the previous session.
Platinum slipped 0.7 percent to $923.99 an ounce, while palladium gained 0.3 percent to $981.47.