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Gold prices dropped for a third straight session on Thursday and hit a fresh four-week low, as investors liquidated their long positions on a firmer dollar, while expectations of more US rate hikes this year also weighed on the market.
Spot gold was down 0.4 percent at $1,312.41 per ounce as of 0755 GMT, after hitting its lowest since Jan. 10 at $1,309.51 earlier in the session.
US gold futures for April delivery were nearly flat at $1,314.50 per ounce.
The dollar rose on Wednesday, marking its biggest one-day gain in more than three months against a basket of currencies. It was steady at 90.269 on Thursday.
"There was consistent selling on Comex...
And offers above the $1,320 cash level were enough to prevent an advance," said MKS PAMP Group trader Alex Thorndike.
"Spot gold slowly began to work its way lower with ongoing liquidation seen from managed money and leveraged clients - those who were still buying aggressively above $1,340."
Asian shares flirted with six-week lows on Thursday, while US stocks finished lower on Wednesday, losing ground late in the session as a jump in Treasury yields kept investor nervousness high.
The US Federal Reserve will stick to its plan for "steady, gradual" interest-rate increases, San Francisco Federal Reserve Bank President John Williams said on Wednesday despite market gyrations and strong data on US wage growth that has bond traders pricing in faster rising inflation.
Hikes in interest rates lead to higher bond yields and dampen the demand for non-yielding gold. The yellow metal is also used as a hedge against inflation.
"The shifting Fed narrative that is gathering hawkish following could be the most significant thorn in the gold bulls side," said Stephen Innes, head of trading APAC at OANDA.
Spot gold is expected to fall more to $1,301 as it has pierced below a support at $1,316 per ounce, according to Reuters technical analyst Wang Tao.
Holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund (ETF), dropped 0.29 percent to 826.90 tonnes on Wednesday from 829.27 tonnes on Tuesday.
Holdings fell for a second straight session after they marked their worst one-day drop since December 2016 on Tuesday.
"The heavy falls in equities appear to have impacted ETF investors," ANZ analysts said in a note.
Among other precious metals, silver was little changed at $16.37 per ounce after touching its lowest since Dec. 22 at $16.22 earlier in the session.
Platinum declined 0.2 percent to $977.50 per ounce, after touching its lowest since Jan. 11 on Wednesday.
Palladium fell 0.3 percent to $981.55 per ounce. Earlier in the session, it hit $977.22, its lowest since Nov. 15.