PRECIOUS-Gold falls on firmer dollar, rising rate-hike expectations
By Ashitha Shivaprasad
April 2 (Reuters) - Gold prices fell on Thursday as the U.S. dollar and oil prices strengthened after President Donald Trump said the U.S. would continue attacks on Iran, spurring inflation concerns and bolstering expectations of higher interest rates.
Spot gold XAU= was down 2.2% at $4,651.35 per ounce as of 1:30 p.m. EDT (1730 GMT), after hitting a two-week high earlier in the session. U.S. gold futures GCcv1 settled 2.8% lower at $4,679.70.
The dollar rose sharply, making greenback-priced bullion more expensive for holders of other currencies. USD/
"The market is very focused on Trump's comments, which so far offer little sign of a quick resolution to the energy situation," said David Meger, director of metals trading at High Ridge Futures.
This is weighing on gold and silver prices, as there is less likelihood of rate cuts, he added.
Trump said in a televised speech that the U.S. military had nearly accomplished its goals in Iran, but offered no clear timeline for ending the month-long war and vowed to bomb the country back into the "Stone Ages".
Oil prices climbed following Trump's remarks. Higher energy prices feed through to broader inflation, reducing the scope for central banks to cut rates. FEDWATCH
Despite its status as a hedge against inflation, gold struggles when rates are high as it yields no interest. Spot gold has fallen 12% since the Middle East conflict started on February 28.
Sentiment was also hit by news that the Turkish central bank's gold reserves dropped by 69.1 metric tons to 702.5 tons last week, bringing the fall in the last two weeks to more than 118 tons as authorities seek to blunt market fallout from the war.
In Asia, gold traded at a premium in India for the first time in two months as softer prices boosted demand, while premiums in China ticked down slightly as buyers awaited a deeper correction. GOL/AS
In other metals, spot silver XAG= dropped 3.7% to $72.38, platinum XPT= rose 0.9% to $1,981.95 and palladium XPD= added 1.9% to $1,497.00.
