Gold prices hit a more than three-week low on Thursday as the dollar strengthened following Donald Trump's victory in the US presidential election, while attention also focused on the decision of the Federal Reserve on interest rates later today.
Spot gold fell 0.1% to $2,656.34 an ounce, by 0327 GMT, after hitting its lowest level since October 15 earlier in the session.
Bullion hit a record high of $2,790.15 last week and has lost more than $130 since.
U.S. gold futures were down 0.5% at $2,663.60.
The dollar index remained near a four-month high, making bullion more expensive for foreign buyers. [USD/]
Trump won back the White House with a landslide victory on Wednesday, but it fueled questions about whether the Fed could make rate cuts at a slower, smaller pace.
Traders anticipate a 25 basis point cut likely to be announced at the end of the Fed meeting later today, with focus also on Chairman Powell's statement for any indication on the future trajectory of central bank rate reduction.
Trump's potential policy is inflationary and this could result in slower cuts, which is rather negative news for gold, but a widening of the US budget deficit and a reduction in fiscal discipline will be positive, Kelvin said Wong, OANDA's senior market analyst for Asia Pacific.
Bullion is seen as a hedge against geopolitical and economic uncertainties, but rising interest rates increase the opportunity cost of holding zero-yielding bullion.
“I still think the trajectory of gold remains bullish, as people would want to buy it as a safe haven to protect themselves from risks. I still expect prices to reach $3,000 next year” , said Peter Fung, head of transactions at Wing Fung Precious Metals.
Spot silver was down 0.4% at $31.03 an ounce, platinum was down 0.3% at $983.73 and palladium was down 0.7% at 1,028.25 dollars. All three metals are down for the second consecutive session.
