Gold beat a hasty retreat on Tuesday as investors latched on to seemingly hawkish remarks from the U.S. Federal Reserve chair, erasing gains from an over 1% rally fueled by concerns over the Omicron coronavirus variant.
Spot gold fell 0.7% to $1,773.21 per ounce by 02:14 p.m. ET (1914 GMT). U.S. gold futures settled down 0.5% at $1,776.5.
Prices earlier rose as much as 1.3% earlier in the session after a warning from Moderna's CEO that COVID-19 vaccines were likely to be less effective against the new variant.
In a testimony before the U.S. Senate Banking Committee, Fed Chair Jerome Powell said the Fed likely will discuss speeding up its taper of large-scale bond purchases at its next meeting.
Powell's comments drove a slight rebound in the dollar, which has steadied since then.
"Everyone got a little surprise as Powell moved closer toward the hawkish side," said Edward Moya, senior market analyst at brokerage OANDA, adding the Fed would likely implement rate hikes at a more rapid pace.
Gold is used to hedge against inflation, but interest rate hikes raise the opportunity cost of holding gold.
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But longer term, gold will be supported by worries over the virus variant, Moya added.
Gold's fall came alongside a tumble in Wall Street after Powell's comments hinting at a faster shift to tightening policy hurt risk sentiment already weighed down by concerns over Omicron.
Elsewhere, spot silver fell 0.1% to $22.86 per ounce, platinum dropped 2.6% to $938.50 and palladium slumped 3.5% to $1,732.50.
Looking ahead to 2022, increased investment in solar panels should boost silver, BofA Global Research said in a note.
"Platinum is the rebound trade on a normalisation of chip shortages in the auto industry; substitution from palladium should also help."