Gold prices were lower on Thursday as the dollar firmed, with a fresh set of global economic data cementing investor worries that global interest rates would stay higher for longer than expected.

Spot gold was down 0.2% at $1,833.57 per ounce, as of 0315 GMT, after hitting a one-week peak on Wednesday.

US gold futures slipped 0.3% to $1,840.50. Although considered a hedge against inflation, higher interest rates to tame rising prices increase the opportunity cost of holding non-yielding bullion.

Gold prices “are just consolidating.

The dollar has strengthened and that’s why we see gold prices coming down a little,“ said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.

The dollar index rose 0.1%, making bullion less affordable for buyers holding other currencies.

Data on Wednesday showed US manufacturing contracted for a fourth straight month in February, but there were signs that factory activity was starting to stabilise, with a measure of new orders pulling back from a more than 2-1/2-year low.

“Gold probably might be range-bound until we get more data… many (are) eyeing what the US Federal Reserve’s going to do this month when they meet and whether they will continue to raise interest rates and by how much, which is the key question,” GoldSilver Central’s Lan said. Fed policymakers will provide updated projections on the rate path and economy at the end of their March 21-22 meeting.

Gold at one-week peak as dollar slides

Money markets expect the Fed’s target rate to peak at 5.485% in September.

Data on Wednesday showed German consumer prices rose more than anticipated in February, following Tuesday’s data showing inflation rose unexpectedly in France and Spain - pushing up European Central Bank rate hike expectations.

Spot silver fell 0.5% to $20.90 per ounce, and palladium lost 0.8% to $1,428.85. Platinum fell 0.5% to $950.64, after scaling a three-week high in the previous session.