Gold extends losses to 4th day on US rate hike uncertainty

By A. Ananthalakshmi

SINGAPORE (Reuters) - Gold extended losses to a fourth straight session on Tuesday on a stronger dollar and fears the Federal Reserve could still raise U.S. rates this year.

Spot gold had eased 0.2 percent to $1,168.40 an ounce by 0344 GMT, after losing about 1.2 percent in the past three sessions.

Gold touched a 3-1/2-month high last week on bets the Fed would not raise U.S. rates amid concerns about the global economy. But the rally lost steam after robust U.S. economic data, and as gold failed to break past the key $1,200-level.

"There has been more uncertainty in recent days about the timing of a rate hike, and that is not helping gold," said a trader in Sydney. "We are just taking cues from the dollar."

The dollar was trading near its highest in over a week against a basket of major currencies. A stronger greenback makes gold expensive for holders of other currencies.

"Technically, things aren't very good at the moment as we broke below the 200-day moving average near $1,175," the trader said.

Gold may break support at $1,168 and fall towards the next support level at $1,155, said Reuters technicals analyst Wang Tao.

Investors have been frustrated by the mixed messages from the U.S. central bank in recent weeks.

Fed Chair Janet Yellen and other officials have said they expect a rate hike will be needed by the end of this year, but two Fed governors last week urged caution. The Fed has kept interest rates near zero for nearly seven years.

Despite strong headwinds from overseas that are holding down U.S. inflation, the Fed should soon begin to raise interest rates to slow economic growth before it becomes unsustainable, San Francisco Fed President John Williams said on Monday.

The Fed holds two more policy meets this year: next week and in December. Market expectations for a rate hike have shifted to next year in recent weeks, though some haven't completely ruled out a hike in December.

"The key factor driving the (gold) price is the market's expectations with respect to the Fed's first interest rate hike," Commerzbank analysts said in a note. "We only envisage a sustained price rise once the uncertainty over the first rate hike has dissipated."

It expects to see gold at $1,150 by the end of the year.

(Reporting by A. Ananthalakshmi; Editing by Richard Pullin and Joseph Radford)