Gold retreats as hawkish Fed comments reinforce policy tightening bets

Among other metals, spot silver XAG= fell 2.5% to $65.39 per ounce, platinum XPT= lost 2.1% to $1,794.28 and palladium XPD= declined 1.7% at $1,285.65.

Richmond Fed President Tom Barkin said on Tuesday that rate hikes and the threat of more to come could temper business inflation expectations and cool price increases without actually slowing down economic activity.

The Fed last week lifted its benchmark rate by 25 basis points to 3.75%-4% and signalled another increase could come before year-end.

Although bullion is often seen as a hedge against inflation, rising interest rates can reduce its attractiveness as investors gravitate toward interest-bearing assets.

Traders are pricing in a 53% chance of a rate hike in October, according to the CME FedWatch Tool.

On the geopolitical front, US President Donald Trump warned that he could annihilate Iran if there is no deal to end the war, but also suggested an agreement could come soon amid a diplomatic push at the United Nations.

"In the long term beyond 2026, we expect gold prices to ease. The main driver of easing gold prices in the long term will be greater risk-on sentiment as the global economy recovers in the later part of the decade," BMI analysts said in a note.

Gold prices fell in range-bound trade on Wednesday, pressured by a stronger dollar and hawkish remarks from US Federal Reserve officials that reinforced expectations of tighter monetary policy.

Spot gold XAU= fell 0.9% to $4,316.78 per ounce, as of 0847 GMT. US gold futures GCcv1 for December delivery were down 0.5% at $4,354.