Gold slipped on Wednesday as the U.S. dollar strengthened and global shares clawed their way off two-month lows, though bullion was underpinned by the view that the dollar's bear run remains in place despite rate hike expectations.
Spot gold dropped 0.85 percent at $1,313.61 per ounce lowest since Jan. 10. U.S. gold futures for April delivery settled down $14.90, or 1.1 percent, at $1,314.60 per ounce.
Platinum briefly moved into a price premium over palladium for the first time since October. The U.S. dollar rose on Wednesday against most major currencies, even as gains on Wall Street dimmed the greenback's safe-haven allure after days of equities volatility.
A stronger dollar makes dollar-priced gold costlier for non-U.S. investors. World stocks clawed their way back from two-month lows on Wednesday, though momentum was weak.
"The rising dollar index is continuing to push liquidation in gold and the other precious metals," said Phillip Streible, senior commodities strategist at RJO Futures. "Gold is not always the safe-haven asset, especially when interest rates are rising quickly."
Gold failed to capitalize this week from the biggest selloff in six years in global equities as U.S. Treasury yields have recently risen, but bullion, still driven largely by dollar movement, is not poised to unwind.
"What we are seeing now (on the stock markets) is just a correction, and the dollar is still weakening (longer term)," said Carlo Alberto De Casa, chief analyst at Activtrades.
"I'm expecting gold to remain above $1,300 in the next few months. The problem for gold would be four (U.S.) rate hikes, but I don't believe (that will happen). At this stage inflation is still under control," he added.
Traders dialed back bets the U.S. central bank would ratchet up the pace of rate increases on Monday to between two and three hikes from three to four hikes last week, according to interest rates futures.
Platinum fell 1.49 percent at $974.74 per ounce after earlier touching $972, its lowest since Jan. 11. The platinum/palladium ratio, which has averaged 0.94 over the last six months, had reached 1.0002, putting platinum at a premium over palladium of 18 cents.
Palladium fell 2.45 percent at $983.80 per ounce, having touched $978.55, its lowest since Nov. 15. Spot silver fell 1.7 percent at $16.35 per ounce after dropping to $16.26, its lowest since Dec. 22.