Gold prices edged lower on Wednesday after US Federal Reserve Chair Janet Yellen hinted at a hike in interest rates in an upcoming meeting of the central bank. Spot gold fell 0.2 percent to $1,225.96 per ounce at 0530 GMT, while US gold futures rose 0.1 percent to $1,227.
"The focus is really on the US fiscal policy. And if that stokes up the inflation expectations, we expect gold to suffer and consolidate for a while," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold.
Xu added, however, that the fund still expects "gold will pick up momentum in the second half of the year."
The Fed will likely need to raise interest rates at an upcoming meeting, Yellen said on Tuesday, striking a more hawkish tone than investors had expected, although she did flag considerable uncertainty over economic policy under President Donald Trump's administration.
Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion and boost the dollar.
The dollar index was mostly unchanged at 101.23, near the 3-1/2-week high of 101.38 hit on Tuesday following Yellen's remarks.
Spot gold may break a support at $1,220 per ounce, according to Reuters technical analyst Wang Tao.
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