Dollar's ascent hampers appetite for gold as rate hikes loom

Gold prices fell on Thursday as the dollar resumed its ascent after a brief dip in the previous session, with looming rate hikes still a headwind for the non-yielding bullion.

Spot gold GOLD was down 0.6% to $1,650.20 per ounce, as of 1203 GMT, having marked its best day since March on Wednesday when the dollar took a breather.

U.S. gold futures GOLD slipped 0.7% to $1,658.70.

"Dollar's recovery has forced gold to unwind some of yesterday's gains. As long as dollar bulls keep the greenback elevated while maintaining their appetite for further gains, gold's upside remains firmly capped," said Han Tan, chief market analyst at Exinity.

Although gold is considered a traditional hedge against economic and other global uncertainties, investors have lately preferred the safety of the dollar amid growing slowdown worries and a high interest rate environment.

The dollar index DXY was up 0.3% against its rivals, making dollar-priced bullion more expensive for overseas buyers.

This week, several Fed officials reiterated the U.S. central bank's commitment to raise interest rates aggressively to battle surging inflation.

Investors now await the U.S. weekly jobless claims report due at 1230 GMT.

"Continued resilience in the labour market may force the Fed's hand into pushing rates even higher. This outlook may see gold dip into sub-$1600 domain. Signs of deterioration in hiring may offer some relief for prices," Tan added.

Meanwhile, spot silver XAGUSD1! shed 1% to $18.70 per ounce.

With gold under pressure, silver should continue to struggle to outperform but a clear positive turn in gold holds considerable upside risks for silver, as the improvement in investor sentiment would occur against a relatively tighter market backdrop, said analysts at UBS.

Platinum PL1! rose 0.5% to $867.32 per ounce, while palladium XPDUSD1! climbed 2.3% to $2,205.54.