LONDON: Gold prices fell more than 1% on Monday to their lowest in four weeks, as prospects of aggressive policy tightening by the US Federal Reserve and a stronger dollar dented the precious metal’s appeal.

Spot gold fell 1% to $1,909.61 per ounce by 1127 GMT, earlier hitting its lowest since March 29 at $1,904.40. US gold futures were 1.3% lower at $1,908.90.

“It seems that the fears about rate hikes have gotten the upper hand as of late,” said Julius Baer analyst Carsten Menke.

With expectations for a half-percentage point interest rate hike at the Fed’s May meeting now locked in, traders on Friday piled into bets that the US central bank will go even bigger in subsequent months in order to tame soaring inflation.

Gold is highly sensitive to rising US interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. It is, however, seen as a safe store of value during economic and political crises.

“We have a three-month target of $1,850,” Menke said adding, “we have been of the opinion that gold is rather expensive as a safe haven asset.”

“We would think that the inflationary pressures are about to ease and that should take away some of the safe haven demand we’ve seen for gold.”

Rival safe haven, the dollar climbed to a level last seen in March 2020, making the greenback-priced gold costlier for other currency holders.

UBS analyst Giovanni Staunovo said mobility restrictions in China was also weighing on physical demand for gold, while risk-off sentiment was dragging down palladium.

Palladium slid 3.4% to $2,293.33 per ounce, while platinum fell 2% to $911.69 after touching its lowest level since December 2021.

Silver fell 2.2% to $23.60 per ounce, having earlier hit an over two-month trough.