Gold slips on stronger dollar, Powell's hawkish comments

Gold prices dipped on Wednesday as a stronger dollar and Federal Reserve Chair Jerome Powell's hawkish comments to shore up US interest rate increases dimmed non-yielding bullion's appeal.

Spot gold was down 0.2 per cent at $1,810.62 per ounce by 1233 GMT, erasing small gains from earlier in the session that seemed to have been driven by limited safe-haven inflows amid growth risks tied to soaring inflation.

US gold futures fell 0.6 per cent to $1,807.70.

Gold's small uptick soon lost steam because higher US interest rates discourage investment in gold, which does not bear any interest despite being considered a hedge against soaring prices.

"The Fed has been key to the dollar strengthening and gold tumbling. And there's no letting up on their hawkish position," said Craig Erlam, senior market analyst at OANDA.

There's not much appetite for gold, and higher yields could continue to weigh on the metal, Erlam added.

Gold settled lower on Tuesday after Powell said the US central bank would push interest rates as high as needed to kill a surge in inflation.

Also hurting bullion's appeal among overseas buyers, the dollar index edged up 0.1 per cent, one day after posting its biggest single-day drop in more than two months.

Gold is losing appeal as the Fed's commitment to control inflation through tighter monetary policies is creating a dynamic that has pushed yields on the 10-year Treasury note to levels close to 3 per cent, Ricardo Evangelista, a senior analyst at ActivTrades, said in a note.

Investor flows into SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, continued to decline, reflecting bearish sentiment in the market.

Spot silver fell 0.3 per cent to $21.55 per ounce, while platinum was down 0.3 per cent to $948.50 and palladium rose 0.4 per cent to $2,061.56.