Gold slides to one-week low as dollar strengthens on Fed hike expectations

Gold prices slipped for a third consecutive session on Thursday, touching a one-week low of $3,948.82 per ounce at 1114 GMT, according to Reuters. The decline was driven by a firm US dollar and growing expectations of additional monetary tightening by the Federal Reserve.

"Gold retreated to test key support around $3,970, as sellers focused on persistent US inflation and hawkish comments from several Fed officials," said Ole Hansen, head of commodity strategy at Saxo Bank.

"Following the hotter-than-expected CPI readings, speculation has grown that the FOMC could opt for a 50-basis-point rate hike at its December meeting, despite the recent sharp decline in energy prices that may help ease inflation pressures in the months ahead," Hansen added.

US consumer-price data for October showed inflation above forecasts, pushing the dollar to a 19-month high and prompting traders to bet on further Fed tightening. Higher interest rates reduce gold’s appeal because bullion yields no interest, and a stronger dollar makes gold more expensive for holders of other currencies.

Investors await US producer-price data due on Friday for additional clues on the interest-rate outlook. Meanwhile, Bank of England policymaker Megan Greene said it was appropriate to "proactively tighten our monetary policy stance" to guard against entrenched wage growth and cost-pass-through by firms.

Other precious metals also fell, with spot silver down 1% to $51.16 per ounce and spot palladium slipping 0.6% to $1,021.25 after reaching recent highs.