BENGALURU: Gold prices dropped to their more than one-month lows on Wednesday, weighed down by a stronger dollar as better-than-expected US economic data raised worries that the Federal Reserve could hike interest rates further.

Spot gold fell 1.14 % to $1,833.20 per ounce by 10:30 a.m. ET(1530 GMT). US gold futures were down 1% to $1,846.00.

US retail sales rose 3% in January over the previous month, highlighting economic resilience despite higher borrowing costs. Higher retail sales were “another indication that if the Fed wants to cool inflation, they’re going to have to raise interest rates to choke off some of this demand,” said Jim Wyckoff, senior analyst at Kitco Metals.

This comes after data on Tuesday showed the US consumer price index had increased year-on-year by 6.4%. That was down from 6.5% in December, but above 6.2% estimated by economists. Following the US data, the dollar index rose to a more than one-month high, making gold more expensive for buyers using other currencies.

“In case of a re-acceleration of inflation and a return to more rapid interest rate increases, gold and silver would suffer,” said Carsten Menke, head of Next Generation Research at Julius Baer. “In contrast, gold and silver would benefit if the Fed started to reduce interest rates due to strengthening signs of recession.”

Also weighing on gold, Fed officials said earlier this week that the US central bank will need to keep raising interest rates gradually.