Prices of US gold futures down almost one percent on Wednesday after posting modest gains during the night, as the dollar hit a 3-week high after strong economic data of the US and the minutes of the policy meeting April Federal Reserve, thought it might be tougher than statement.
Gold for June delivery on the Comex division of the New York dipped $2.00, or 0.16%, to trade at 1,274.80 a troy ounce.
Spot gold dipped 0.7 percent to $1,271.60 an ounce.
A day earlier, gold inserted into $ 2.70, or 0.21%, but investors took a cautious after strong data on US inflation and the reviews by the Federal Reserve officials rekindled prospects rates of central banks raising later this year.
Yellow metal prices have risen nearly 19% so beginning of the year amid signs that the Fed will take a slow and cautious approach to increasing interest rates this year.
Gold is responsive to the movement in US rates, as an increase would raise the opportunity cost of hold assets not yield as bullion. A gradual process to higher rates is seen as little threat for gold prices to a rapid series of increases.
The US dollar index, which tracks the greenback versus a basket of six rivals, rose 0.2% to 94.77, nearing a three-week high of 94.84 hit on Friday.
Holdings in SPDR Gold exchange-traded fund, rose 0.56 percent to 855.89 tonnes on Tuesday, the highest since Nov 2013.
Trading in the domestic market is sluggish. Only weak rupee support prices. While 0.2 per cent down on MCX gold is trading around Rs 30,000.
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