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India - Gold was trading near a three-week low on Thursday after minutes from a Federal Reserve policy meeting signalled the US central bank could raise rates as soon as next month, boosting the dollar.
The US economy could be ready for another interest rate hike in June, according to the Fed's April policy meeting minutes released on Wednesday. The central bank had lifted rates in December for the first time in nearly a decade.
Gold is highly sensitive to rising rates, which increase the opportunity cost of holding the metal.
Spot gold was little changed at $1 257.80 per ounce at 03:23 GMT, while US gold futures dipped 1.2% to $1 259.10. Spot gold fell 1.7% in the previous session, hitting a three-week low of $1 254.65.
"Just as the prospect of extended low rates and a weaker dollar provided commodities with considerable tailwinds earlier in the year, the reverse could be at work now," said INTL FCStone analyst Edward Meir.
"As rising rates and a stronger dollar pressures prices lower, gold could be a front-casualty in such a retreat."
Bullion has gained about 19% this year on speculation that the Fed has slowed its expected pace of rate increases on concerns over volatility in global markets. A possible hike in June suggests the Fed is closer to tightening monetary policy earlier than investors had expected.
Fed Vice Chairs William Dudley and Stanley Fischer are due to speak later in the day and the markets will be eager to get more details on the Fed's thinking.
Bullion investors will also be eyeing data on US weekly jobless claims on Thursday for trading cues.
"I suspect people will use this opportunity to continue to add (gold) allocations but at a much lower pace. So, it would not have much of a huge impact on the global gold market," said Richard Xu, fund manager of China's top gold exchange-traded fund (ETF) HuaAn Gold.
The dollar was up on Thursday after soaring to multi-week highs in the previous session following the release of the Fed minutes. A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.
Among other precious metals, spot silver was up by 0.01% at $16.842 per ounce, spot platinum fell 0.07% to $1 023.53 an ounce, while spot palladium was up 0.04% at $571.22 per ounce.
