By Seher Dareen
(Reuters) - Gold prices slipped to a more than two-month trough on Wednesday as the dollar rallied on expectations of aggressive monetary policy tightening by the U.S. Federal Reserve.
Spot gold slipped nearly 1% to $1,887.41 per ounce by 12:44 p.m. ET (1644 GMT), with prices earlier dropping to $1,881.45, its lowest level since Feb. 24.
U.S. gold futures fell 0.8% to $1,888.90 per ounce.
"There's a flight to safety right now out of other currencies into U.S. dollar... Gold is going to struggle to rally between now and the Fed meeting," said Bob Haberkron, RJO Futures senior market strategist.
The dollar index charged to its highest level since January 2017, fuelled by expectations that the U.S. central bank will be more hawkish than peers and safe-haven flows fanned by concerns over slowing growth in China and Europe. [USD/]
The Fed is expected to increase rates by 50 basis points at its May 3-4 policy meeting. [FEDWATCH]
Rising U.S. interest rates increased the opportunity cost of holding non-yielding gold, while also boosting the dollar, in which it is priced. The greenback is also seen as a rival safe-haven asset to gold during economic and political crises.
"While the yellow metal's prices have remained extremely resilient against an aggressively hawkish Fed, as a protracted war in Ukraine simultaneously raised both geopolitical uncertainty and inflation risks and thereby fuelled demand for havens, we see few participants left with appetite to buy gold," analysts at TD Securities said in a note.
In other metals, spot silver dipped 0.3% to $23.41 per ounce, having earlier touched a low since Feb. 15.
Platinum eased 0.5% to $916.51 per ounce and palladium rose nearly 2% to $2,229.65 .