Gold slipped 1% to a two-week low on Thursday, pressured by elevated U.S. Treasury yields and firmer risk appetite, with investors expecting aggressive policy tightening by the Federal Reserve.
Spot gold was down 0.6% at $1,946.73 per ounce by 1:44 p.m. ET, after hitting its lowest level since April 8.
U.S. gold futures settled down 0.4% at $1,948.20.
San Francisco Fed President Mary Daly on Wednesday said she believes the case for a half-percentage-point rate hike next month is "complete" and "solid," with the Fed's rate hike path this year broadly seen as appropriate in the face of high inflation.
Gold is seeing a correction since the market is expecting the Fed to be more aggressive in hiking rates, while yields are also moving up, said Bart Melek, head of commodity strategies at TD Securities.
While gold is considered a hedge against inflation, rising interest rates increase the opportunity cost of holding non-yielding bullion.
U.S. 10-year Treasury yields edged towards the more than three-year peak scaled on Wednesday, as bond markets suffered another sharp sell-off amid bets for aggressive rate hikes.
"The chart postures of the U.S. stock indexes have improved this week, to pull some money away from the safe-haven metals," Kitco's senior analyst Jim Wycoff said in a note.
Investors also took stock of U.S. weekly jobless claims, which fell to their lowest level in 52 years, improving risk appetite further.
Gold rallied to within striking distance of the $2,000 level on Monday as concerns around the Russia-Ukraine conflict and rising inflation spurred safe-haven demand.
On the technical front, gold is consolidating around $1,940-$1,960 per ounce, and beyond that, it could find support around $1,915-$1,930, said Brian Lan, managing director at dealer GoldSilver Central.
Spot silver fell 2.5% to $24.54 per ounce, having earlier hit a two-week trough. Platinum was down 1.9% at $968.15, and palladium fell 1.9% to $2,404.62.