NEW YORK: Gold beat a hasty retreat on Tuesday as investors latched on to seemingly hawkish remarks from the US Federal Reserve chair, erasing gains from an over 1% rally fuelled by concerns over the Omicron coronavirus variant.

Spot gold fell 0.8% to $1,770.80 per ounce by 12:29 p.m. ET (1729 GMT).

US gold futures fell 0.7% to $1,772.70.

Prices earlier rose as much as 1.3% after a warning from Moderna’s CEO that COVID-19 vaccines were likely to be less effective against the new variant.

In a testimony before the US Senate Banking Committee, Fed Chair Jerome Powell said the Fed likely will discuss speeding up its taper of large-scale bond purchases at its next meeting.

Powell’s comments drove a slight rebound in the dollar, which has since steadied.

“Everyone got a little surprise as Powell moved closer toward the hawkish side,” likely implementing rate hikes at a more rapid pace, said Edward Moya, senior market analyst at brokerage OANDA.

Gold is used to hedge against inflation, but interest rate hikes raise the opportunity cost of holding gold.

But longer term, gold will be supported by worries over the virus variant, Moya added.

Gold’s fall came alongside a tumble in Wall Street after Powell’s comments hinting at a faster shift to tightening policy hurt risk sentiment already weighed down by concerns over Omicron.

Elsewhere, spot silver fell 0.6% to $22.75 per ounce, platinum dropped 3.1% to $933.32, and palladium slumped 4.3% to $1,717.27.

Looking ahead to 2022, increased investment in solar panels should boost silver, BofA Global Research said in a note.