[NEW YORK] Gold fell on Monday for a third day, with demand for bullion hurt as the dollar arrested three weeks of declines after hawkish comments from US Federal Reserve officials renewed expectations of US interest rate hikes.
The US dollar rose 0.2 per cent against a basket of currencies, as two central bank officials, San Francisco Fed President John Williams and Atlanta Fed President Dennis Lockhart, raised the possibility of a rate hike as soon as April.
Spot gold was down 0.9 per cent at US$1,244.50 an ounce at 3:43 pm ET (1943 GMT), while US gold futures for April delivery settled down US$10.10 an ounce at US$1,244.20.
"We're going to see some more selling pressure because it seems like the possibility of rate hike is still on the table,"said George Gero, managing director at RBC Wealth Management.
"Longer term, we're going to see higher prices because of the continued stimulus expected in the euro zone and China." The metal has risen nearly 17 per cent this year on fading expectations for rate hikes.
It rallied on Wednesday after Fed policymakers revised down the number of times they expect to raise interest rates this year to two from four, but it failed to revisit the previous week's 13-month high, and it slid as the US dollar rebounded.
Analysts said the Easter holidays at the end of the week will cost gold some momentum.
Market indicators are signaling that investors see stronger risks of inflation, which has been almost non-existent since the credit crisis, despite scepticism from the Fed.
Some economists fear that ultra-low interest rates around the world will eventually stoke inflationary pressures. Gold has benefited from low rates, which cut the opportunity cost of holding non-yielding assets like gold.
Holdings of gold-backed exchange-traded funds, which issue securities backed by physical metal, continued to rise.
The largest, New York-listed SPDR Gold Shares, reported an 11.9-tonne inflow on Friday, bringing its total inflow for the year to 176.6 tonnes, up from 40.8 tonnes in the same period of last year.
Silver was up 0.2 per cent at US$15.82 an ounce, while platinum was up 1.5 per cent at US$982.90 an ounce and palladium was up 1.8 per cent at US$602.75 an ounce.