BENGALURU: Gold prices were tepid on Wednesday pressured by a robust dollar after a senior U.S. Federal Reserve official reaffirmed the need for a further increase in interest rates, making bullion more expensive for holders of other currencies.
Fed Vice Chair Richard Clarida said on Tuesday the central bank should continue to gradually raise interest rates, but it was "especially important" to monitor economic data as monetary policy was getting close to a neutral stance.
"The strength of the U.S. dollar has been bad for gold, while the Fed is little more bullish about interest rates," said John Sharma, an economist with National Australia Bank (NAB).
Prospects of higher U.S. interest rates are negative for dollar-priced gold as they raise the opportunity cost of holding the bullion.
Investor attention is now turned towards Fed Chairman Jerome Powell's speech later on Wednesday and the minutes from the Fed's Nov. 7-8 meeting on Thursday, as they await cues on U.S. rates hikes in 2019.
"Powell seems likely to reiterate the case for further tightening, which might boost the U.S. dollar further and hurt gold," said Ilya Spivak, a currency strategist for DailyFX.
Spot gold was little changed at $1,213.91 per ounce at 0710 GMT, having dipped to its lowest level since Nov. 15 at $1,211.36 in the previous session.
U.S. gold futures were down about 0.1 percent at $1,214.
"After holding around $1,220/oz over the past week, gold prices finally capitulated as investor appetite weakened," ANZ analysts said in a research note, adding, rising trade tensions saw investors seeking a safe haven in the dollar and weighing on the precious metals complex.
The dollar index, a gauge of its value versus six major peers, held steady at 97.39, sitting just below this year's high of 97.69.
U.S. President Donald Trump is prepared to hike tariffs on Chinese imports if there is no breakthrough on longstanding trade dispute during a Saturday night dinner with Chinese leader Xi Jinping, White House economic adviser Larry Kudlow said on Tuesday.
"For gold, a disappointing G20 is not necessarily supportive because while yields might drop amid the follow-on risk aversion, the U.S. dollar attracts genuine safety-seeking flows," DailyFX' Spivak added.
Among other precious metals, spot silver rose 0.2 percent to $14.17 per ounce, having fallen to a nearly-two-week low of $14.05 in the previous session.
Platinum was up 0.3 percent to $832.80 per ounce. Prices hit their lowest since Nov. 15 at $825.25 on Tuesday.
Palladium rose 0.1 percent to $1,151.10 per ounce.
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