Investing.com - Gold prices fell to a fresh three-week low during North American morning hours on Tuesday, as traders bet on a strong likelihood the Federal Reserve will raise rates at its upcoming policy meeting next week.
Comex gold futures touched a session low of $1,221.00 a troy ounce, a level not seen since February 15. It was last at $1,222.15 by 8:20AM ET (13:20GMT), down $3.45, or about 0.3%.
Spot gold was down $3.10 at $1,222.40 per ounce.
Markets dramatically adjusted expectations for U.S. interest rate hikes this year following hawkish comments from several top Fed officials last week, including Chair Janet Yellen.
Futures traders are pricing in around a 90% chance of a hike at the Fed's March 14-15 meeting, according to Investing.com’s Fed Rate Monitor Tool.
Odds of a second rate hike in September currently stand at 67%, while a third hike in December is priced in at 53%, aligning market expectations with the Fed's current forecast for three rate hikes in 2017.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Investors are now waiting for further clues on the likely pace of hikes, with all eyes on this week's U.S. jobs report.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was slightly higher at 101.80 in New York morning trade. It reached a two-month high of 102.27 last week.
Treasury yields were also up, with the U.S. 10-Year bond at around 2.50%.
Also on the Comex, silver futures for May delivery slipped 11.6 cents, or around 0.7%, to $17.65 a troy ounce.
Meanwhile, platinum was down 0.7% to $971.85, while palladium dipped 0.6% to $768.27 an ounce.
Elsewhere in metals trading, copper futures lost 1.6 cents, or about 0.6%, to $2.636 a pound.