Gold fell on Wednesday as the dollar gained after comments from U.S. Federal Reserve officials raised expectations of an interest rate hike in March and overshadowed President Donald Trump's first major policy speech to Congress
New York Fed President William Dudley -- one of the most influential U.S. central bankers -- said the case for tightening monetary policy had become "a lot more compelling," while San Francisco Fed President John Williams said he saw "no need to delay" raising rates.
Money market futures are now pricing in close to a 70 percent chance of a rise in official interest rates in March, compared with a little more than 30 percent on Tuesday.
"Rate rises are now priced in to futures but not in to gold, so the risk is to the downside (for gold)," said Mitsubishi analyst Jonathan Butler.
Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar in which it is priced.
Spot gold dropped 0.18 percent to $1,246.30 per ounce, heading for a third straight day of losses. The metal hit its highest since Nov. 11 at $1,263.80 on Feb. 27.
U.S. gold futures fell $3.90 percent to $1,250.
"Fed Chair Yellen will be giving a speech on Friday. If Yellen's remarks also point to a rate hike in the near future, this will presumably cause the dollar to further appreciate and will weigh on the gold price," Commerzbank said in a note.
Expectations that Trump would give details on stimulus plans on Tuesday were largely disappointed, with the President failing again to provide detail on tax reform and infrastructure spending.
The speech did, however, contrast with the harsher rhetoric heard during Trump's election campaign, tempting some investors back into riskier assets and slightly knocking gold's appeal as a safe haven in times of political or economic upheaval.
"Gold prices are reacting to the bullishness in other markets and are easing accordingly. That said, with U.S. President Trump's speech not giving much substance there is still room for disappointment," said FastMarkets analyst William Adams.
The dollar index was up 0.56 percent at 101.69. India's February gold imports surged more than 82 percent from a year ago as consumers ramped up purchases for weddings, provisional data from consultancy GFMS showed.
gained 0.44 percent to $18.39 per ounce.
was down 1.43 percent at $1,008.50, while rose 0.95 percent to $776.25.