LONDON: Gold eased on Wednesday following hawkish comments from US Federal Reserve officials that raised the prospects of a rate increase this year ahead of the release of minutes from the last Fed policy meeting.

New York Fed President William Dudley said a rate hike in September was possible, while Atlanta Fed President Dennis Lockhart said the US economy was likely strong enough for at least one rate increase before the end of 2016, with two a possibility.

Spot gold was down 0.2 per cent at $1,343.01 an ounce by 1142 GMT. US gold fell 0.6pc to $1,348.60 an ounce.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

“What you are seeing is volatility on speculation about when the US Fed will raise rates and that has been the main driver (of gold prices),” Simona Gambarini, an analyst at Capital Economics said.

Spot gold looks neutral in a range of $1,333.50-$1,358.01 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.19pc to 962.23 tonnes on Tuesday.

Silver fell 0.5pc to $19.67 an ounce. Platinum was down 0.1pc at $1,111.70, while palladium fell 0.4pc to $697.91.

Published in Dawn, August 18th, 2016