Gold fell on Wednesday as the dollar climbed to a fresh 14-year high against a currency basket, extending a week-long rally driven by a surge in Treasury yields after Donald Trump's election to the U.S. presidency.
The metal has shed more than $100 an ounce from last Wednesday's post-election high on the back of the sharp rise in bond yields and burgeoning appetite for risk.
Major banks and investors have begun to debate the possibility of another move towards parity between the dollar and the euro, as the U.S. currency benefited from expectations of an inflationary push from the future Trump administration.
"The most important thing that we saw for gold (after the election) was that the dollar appreciated," LBBW analyst Thorsten Proettel said. "It's the old game -- when the dollar is appreciating, the gold price is weaker, because gold is an alternative currency."
"Also, yields on 10-year Treasuries went up 50 basis points, which is poison for gold, as a non-interest bearing asset," he added.
Investors resumed post-U.S. election selling of bonds and buying stocks on Wednesday after a pause earlier this week, albeit less aggressively.
Gold is also expected to be feeling the pressure from an imminent hike in U.S. interest rates, which are tipped to rise for only the second time in nearly a decade next month.
It would need a surprise for the Federal Reserve not to raise U.S. interest rates in December, one of the central bank's policymakers, James Bullard, told reporters at a banking conference on Wednesday.
"With Fed officials' recent comments, talk of a rate rise will hardly inspire gold to go higher," HSBC said in a note.
Investor appetite for gold remained slack, with the world's largest gold-backed exchange-traded fund, SPDR Gold Shares , saying its holdings fell another 1.5 tonnes on Tuesday to a 4-1/2 month low of 927.45 tonnes.
In the major physical markets, some Indian gold traders are placing bulk short-term import orders on fears that Prime Minister Narendra Modi might soon add curbs on overseas purchases of the metal to his withdrawal of high-denomination banknotes in his fight against 'black money'.
Silver was down 0.4 percent at $17.01 an ounce, and platinum was 0.7 percent lower at $928.75. Palladium was down 1 percent at $699.30.