Investing.com - Gold futures held near a three-month low on Wednesday, as expectations for higher U.S. interest rates continued to dampen sentiment for the precious metal.
Gold costs money to store and struggles to compete yield-bearing assets when interest rates are on the rise.
On the Comex division of the New York Mercantile Exchange, gold for December delivery tacked on 0.52%, or $6.50, to trade at $1,255.00 a troy ounce during European morning hours.
A day earlier, gold futures fell to $1,248.10, a level not seen since June 6, before settling at $1,248.50, down $5.80, or 0.46%.
Futures were likely to find support at $1,241.20, the low from June 5 and resistance at $1,272.60, the high from September 8.
Also on the Comex, silver for December delivery inched up 0.71%, or 13.5 cents, to trade at $19.05 a troy ounce. Silver futures hit $18.89 on Tuesday, the lowest since June 5.
The U.S. dollar index, which tracks the performance of the greenback against a basket of currencies, rose to a 15-month high of 84.43 on Wednesday.
The greenback hit a fresh six-year high against the yen and held near a 14-month peak against the euro.
The dollar remained well bid after a study by the San Francisco Federal Reserve suggested that investors' expectations for rate hikes lag those of the Fed.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The greenback has rallied in recent weeks amid expectations that the Federal Reserve may announce a rate increase earlier than expected after economic data indicated that the recovery in the U.S. is progressing strongly.
The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting on September 16-17, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
In the week ahead, investors will be awaiting Friday’s U.S. data on retail sales and consumer sentiment for further indications on the strength of the economic recovery and the possible future path of monetary policy.
Elsewhere in metals trading, copper for December delivery shed 0.05%, or 0.2 cents, to trade at $3.101 a pound as fresh concerns about China's credit supply and ongoing strength in the U.S. dollar hurt sentiment.
Chinese Premier Li Keqiang said on Tuesday that the country's money supply grew by 12.8% in August, slower than July's 13.5% growth and below expectations for an expansion of 13.4%.
The weak credit data underlined concerns about slowing growth in the world's biggest consumer of the industrial metal.
China is the world's largest copper consumer, accounting for nearly 40% of global demand.