Gold prices extended losses to a five-week low on Wednesday as the dollar gathered strength on the prospect of a US interest rate hike. Investors are awaiting February non-farm payrolls data on Friday as a barometer of the US economy after Federal Reserve Chair Janet Yellen said last week the central bank was poised to lift rates provided jobs and inflation data held up.
These comments were seen as cementing plans for an increase at the Fed's March 14-15 meeting. Spot gold was down 0.5 percent at $1,209.49 an ounce by 2:59 pm EST (1959 GMT), after touching its lowest since February 1 at $1,206.05, putting it on track for its fifth straight session in the red. The most active US gold futures for April delivery settled down 0.6 percent at $1,209.40.
"Non-farm payrolls ... will provide final confirmation of a rate hike next week and this could put more pressure on gold," Julius Baer commodities analyst Carsten Menke said. Higher rates tend to put pressure on gold prices because they raise the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
The dollar index, which pits the greenback against six major currencies, rose 0.3 percent. "Despite the recent selloff we think that gold prices have been very resilient, given the circumstances," said Georgette Boele, precious metals analyst for ABN Amro, pointing to the rise in two-year-US Treasury yields and strong US equity markets. n other precious metals, silver slipped 1.3 percent to $17.26 per ounce, after tapping its lowest since January 31 at $17.19 Platinum fell 1.4 percent to $946.45 per ounce, after falling to $941.50, the lowest since January 5. Palladium eased 0.8 percent to $766 per ounce.
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