Gold prices fell on Wednesday, weighed down by the dollar’s recovery minutes following the May Fed minutes showed that most participants believe that half a percentage point interest rate increases will likely be appropriate in June and July.
Spot gold is down 0.7% at $1,853.73 an ounce, and US gold futures are down 0.7% at around $1,852.50.
The dollar rose 0.3%, following hitting its lowest level in a month on Tuesday.
Although gold is often seen as a hedge once morest inflation, higher interest rates undermine its appeal because they tend to raise bond yields, raising the opportunity cost of owning zero-yield bullion.
On the other hand, Atlanta Fed President Rafael Bostic warned on Tuesday that large increases in interest rates might lead to “major economic disruption.”
Spot silver fell 1% to $21.86 an ounce, platinum fell 0.9% to $945.52, and palladium fell 0.2% to $2003.29.
“Platinum and palladium are being kept in check by ongoing problems in the auto industry, slowing demand for these precious metals,” Commerzbank analysts said in a note.
