Gold prices fall Rs 256 to Rs 29598 as dollar extends gains

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Gold prices fall Rs 256 to Rs 29598 as dollar extends gains

Spot gold was down 0.7 percent at $1,285.40 an ounce as of 1417 GMT, while U.S. gold futures for December delivery slipped 1.2 percent to $1,286.80 per ounce.

Gold fell for a third straight session on Wednesday on pressure from the USA dollar's gains for much of the session and amid speculation that the next chair of the Federal Reserve could be a policy hawk.

Gold prices were roughly unchanged on Wednesday amid dollar weakness on the back of weaker-than-expected housing data. "It's partly (the possibility of a hawkish Fed chair) and that the Fed is going to and needs to hike rates this year that is contributing to a bullish dollar environment", Martin Arnold, commodities analyst at ETF Securities, said.

Spot gold was down 0.3 percent at $1,281.50 an ounce by 2:21 p.m. EDT (1821 GMT), having touched its lowest since October 9 at $1,276.73.

Powell is expected to be the next Fed chairman, according to a slim majority of economists in a Reuters poll, though a lot of them said that incumbent Janet Yellen would be the best option. The Fed will probably need to raise rates in December and then three or four times "over the course of next year", assuming US unemployment continues to fall and inflation rises, Boston Fed President Eric Rosengren said on Monday.

Gold is highly sensitive to rising US interest rates, as they increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.

Catalonia refused on Tuesday to bow to the Spanish government's demand that it renounce a symbolic declaration of independence, setting it on a political collision course with Madrid later this week.

However, the brokerage house believes that the host of economic data sets released in the United States in recent times indicate that the dollar Index might possibly change its direction from weakness to strength, which could halt the pace at which gold prices rise.

Higher US interest rates tend to boost the dollar and push up bond yields, putting pressure on greenback-denominated gold.

In other precious metals, silver was flat at $17 an ounce after touching its lowest in more than a week. Platinum for next January went down 10.20 dollars, or 1.09 percent, to settle at 924.60 dollars per ounce.

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