By Zandi Shabalala
LONDON (Reuters) - Gold sank to a one-year low on Thursday as the dollar powered higher after comments from U.S. Federal Reserve chairman Jerome Powell which reaffirmed expectations for more interest rate rises in the world's largest economy.
Powell, in a closely watched two-day congressional testimony, said he believed the United States was on course for years more of steady growth, and carefully played down the risks to the U.S. economy of an escalating trade conflict.
The Fed raised rates in June and policymakers indicated they expect two more rate increases this year. Powell said nothing in his testimony this week to undermine that, and said the economy was poised for several more years of growth.
Gold is highly exposed to interest rates, particularly in the United States, as higher rates lift the opportunity cost of holding non-yielding assets and boost the dollar, in which gold is priced.
Spot gold fell 0.7 percent to $1,217 per ounce by 1140 GMT, having earlier touched its lowest since July 2017 at $1,214.45. U.S. gold futures for August delivery were 0.9 percent lower at $1,216.56 an ounce.
"Gold is not being used as a safe haven right now despite the ongoing trade war, and the stronger dollar is dominating the story amidst the rate-rising environment."
Gold is generally regarded as a safe and stable store of value during times of global uncertainty.
The dollar held firm against its peers, supported by bullish comments from Powell, which affirmed expectations for more interest rate increases this year.
"Gold should find first support at yesterday's low of $1,221, with the psychological $1,200 level to follow. Resistance (is) at $1,229, with this week's high of $1,245 above that," MKS PAMP Group said in a note.
U.S. President Donald Trump said on Wednesday the United States may hammer out a trade deal with Mexico, and then do a separate one with Canada later, sowing fresh doubts about the future of the North American Free Trade Agreement (NAFTA).
Among other precious metals, silver was down 1.6 percent at $15.27 an ounce, its lowest since last July.
Platinum was 2.2 percent lower at $795 an ounce. In the previous session, it dropped to a more than two-week low of $798.14.
Palladium fell 1.6 percent to $893 per ounce, having slipped to its lowest since August 2017 at $888.65.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)