NEW YORK: Gold prices dropped more than 1% to hit a seven-week low on Tuesday, as the dollar strengthened and US Treasury yields surged on expectations of a sooner-than-expected hike in interest rates by the Federal Reserve.

Spot gold was down 0.8% at $1,736.81 per ounce by 01:43 p.m. EDT (1743 GMT), after falling to its lowest since Aug. 11 to $1,726.19 earlier in the session. US gold futures settled 0.8% lower at $1,737.5 per ounce. Higher interest rates increase the opportunity cost of holding non-yielding bullion.