Investing.com - Gold prices resumed losses from the prior session during European morning hours on Thursday, amid rising expectations that the Federal Reserve will raise interest rates later this month.
Comex gold futures declined $3.55, or about 0.3%, to $1,246.45 a troy ounce by 3:10AM ET (08:10GMT), after losing around $4 on Wednesday.
Spot gold was down $4.00 to $1,245.60 per ounce.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was slightly higher at 101.86 in London morning trade. The index reached a seven-week high of 102.00 earlier.
Treasury yields were little changed, with the U.S. 10-Year bond at around 2.467%, close to a two-week high, while the Fed-sensitive 2-Year yield hovered near a more than seven-year high of 1.308% touched on Wednesday.
Fed Governor Lael Brainard said on Wednesday that an improving global economy and a solid U.S. recovery mean it will be "appropriate soon" for the U.S. central bank to raise interest rates.
Her comments added an important voice to the chorus of officials this week signaling rates may rise as soon as mid-March.
New York Fed President William Dudley said on Tuesday that the case for a rate hike has become "a lot more compelling" and San Francisco Fed President John Williams said a rate hike would be seriously considered at the March meeting and that he sees no reason to delay.
More clues on interest rate hikes ahead of the central bank's March 14-15 meeting are expected to come Friday, when Fed Chair Janet Yellen speaks on monetary policy in Chicago. Vice Chair Stanley Fischer also speaks Friday.
Investors raised their outlook on a faster pace of U.S. rate increases following the flurry of hawkish Fed comments this week.
Futures traders are now pricing in around a 75% chance of a Fed hike in March, up from around 25% at the start of the week, according to Investing.com’s Fed Rate Monitor Tool.
Odds of a second rate hike in September currently stand at 63%, while a third hike in December is priced in at 53%, aligning market expectations with the Fed's current forecast for three rate hikes in 2017.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Also on the Comex, silver futures for May delivery dipped 6.1 cents, or 0.3%, to $18.42 a troy ounce after reaching $18.51 on Wednesday, the highest since November 11.
Meanwhile, platinum was down 0.2% to $1,017.55, while palladium shed 0.4% to $775.92 an ounce.
Elsewhere in metals trading, copper futures lost 0.6 cents, or about 0.2%, to $2.730 a pound.