Gold prices fell on Friday and were on track for a third consecutive weekly decline, as a stronger dollar and hawkish signals from the US Federal Reserve weighed on the non-yielding metal.
Spot gold was down 0.6 per cent at $4,184.33 per ounce, as of 0211 GMT. The contract was down 0.9 per cent so far this week.
US gold futures for August delivery fell 1 per cent to $4,202.10.
Markets in mainland China and Hong Kong were closed for the Dragon Boat Festival holiday.
The dollar hovered around a one-year high, making greenback-priced bullion more expensive for other currency holders.
“Gold’s rally on the back of the US-Iran peace deal proved short-lived. The resurgent dollar, powered by the Fed’s newly hawkish tone under Kevin Warsh, has stolen the spotlight,” said Tim Waterer, chief market analyst at KCM Trade.
“The new Chairman’s firm stance has effectively neutralised the geopolitical tailwind, reminding everyone that monetary policy still calls the shots.”
Nine of the US central bank’s 19 policymakers now believe they will need to raise the policy rate this year, according to projections published on Wednesday after the Fed announced its decision to leave the policy rate unchanged in Kevin Warsh’s debut policy meeting as chairman.
Inflationary pressures stemming from the Iran war have prompted a growing number of central banks to either raise borrowing costs or signal moves to tame price growth.
Traders now see an 87 per cent chance of a US rate hike in December, jumping from 61 per cent prior to the Fed decision, according to the CME FedWatch Tool.
Gold tends to lose appeal when rates are high, as it does not yield interest.
Goldman Sachs expects gold prices to rise to $4,900 per ounce by December, lower than its earlier forecast of $5,400, as the bank doesn’t expect a Fed rate cut this year anymore.
On the geopolitical front, oil tankers sailed through the Strait of Hormuz and the US said it lifted its blockade on Iran on Thursday.
Spot silver fell 1.5 per cent to $64.83 per ounce, platinum lost 1.3 per cent to $1,674.47, and palladium was down 0.8 per cent at $1,268.65.