Gold hits near two-week low on Fed chief's hawkish stance

Spot silver XAG= fell 0.4% to $66.10, platinum XPT= declined 1.3% to $1,797.03 and palladium XPD= slipped 2.5% to $1,386.96.

BMI said silver prices were likely to stay near current levels, supported by steady investment demand and constrained mine supply, while easing physical tightness and softer demand would limit further gains.

Gold fell on Monday to its lowest in nearly two weeks after U.S. Federal Reserve Chair Kevin Warsh signalled that interest rate hikes may be needed to ease price pressures, while escalating Middle East tensions fuelled inflation fears.

Spot gold XAU= fell 0.8% to $4,417.04 per ounce by 0406 GMT, hitting its weakest level since August 19. Prices dropped more than 3% on Friday.

U.S. gold futures GCcv1 declined 1.4% to $4,466.80.

"Gold is still licking its wounds after the hawkish tone struck by Warsh at Jackson Hole. US military action in Iran has put upward pressure on oil prices, and this has added to gold’s woes from an inflation standpoint," said Tim Waterer, chief market analyst at KCM Trade.