Gold slides to 8-month low as US rate hike looms

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Gold fell to an eight-month low on Thursday after the U.S. Federal Reserve's reiteration that interest rates were likely to rise this year pushed the dollar index to a seven-week high.

Stocks worldwide rose on strong corporate earnings reports and relief over Greece's debt issues. The Greek parliament passed the austerity measures demanded by lenders to open talks on a multi-billion-euro bailout, diverting some attention from gold.

Platinum hit its lowest since February 2009 at $1,000.25 an ounce, hurt by perceptions of plentiful supply. Top producer Anglo American Platinum said its output rose 60 percent in the second quarter.

Palladium slipped to its lowest since November 2012 at $622.75 an ounce.

Commodities tomorrow: Inventory down, dollar up
Commodities tomorrow: Inventory down, dollar up   

Spot gold was down 0.4 percent at $1,144.65 an ounce at 2:41 p.m. EST, after falling to the lowest since November at $1,142.10 following Federal Reserve Chair Janet Yellen's statement on Wednesday that the central bank will likely raise interest rates later this year if the U.S. economy expands as expected.

U.S. gold futures for August delivery settled down 0.3 percent at $1,143.90 an ounce.

Gold is sensitive to rising U.S. interest rates as they increase the opportunity cost of holding non-yielding bullion and help the dollar.

Read MoreGold hits 4-month low as Fed signals rate rise this year

"The market is beginning to focus on the timing of the rate hike and we are seeing that supporting the dollar, and that's why we are seeing gold grinding lower," Danske Bank senior analyst Jens Pedersen said.

The dollar index rallied to a seven-week peak, with an easing in jobless claims reinforcing market expectations of a 2015 U.S. interest rate hike.

The Fed has indicated that the timing of a rate rise will depend on economic data.

"The market currently seems to be pricing a 60 percent rate hike probability in September, which has seen the U.S. dollar move one way since yesterday afternoon at the expense of weakening commodity currencies," said Amaryllis Gryllaki, associate of sales for Global Metals at TD Securities in New York.

Premiums for physical gold on the Shanghai Gold Exchange picked up slightly to $2-$4 an ounce over the spot price, although analysts say a slowing economy could cap demand from China, the world's top gold consumer.

"While gold remains out of favor among investors, the potential return of Chinese buyers seeking an alternative to equities and real estate remains the key bullish wild card," Julius Baer said in a note.

Silver was down 0.7 percent at $14.98 an ounce.