Investing.com - Gold prices were under pressure during North American morning hours on Tuesday, adding to overnight losses, as the U.S. dollar rose broadly after two Federal Reserve policymakers pointed to the potential for U.S. interest rates to rise next month.
Gold for April delivery on the Comex division of the New York Mercantile Exchange lost $9.45, or about 0.8%, to $1,229.75 a troy ounce by 8:40AM ET (13:40GMT), after falling to a session low of $1,228.70.
There was no settlement in Comex gold prices on Monday, due to the President’s Day holiday in the U.S.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.6% to 101.53 in early New York morning trade, rising back toward last week's more than one-month high of 101.75.
Meanwhile, 10-year U.S. government bond yields rose 3.6 basis points to 2.461%.
Philadelphia Fed President Patrick Harker said Monday that he would likely support an interest rate increase at the central bank’s next meeting in March if he sees additional evidence that inflation is gaining momentum.
His comments came after Cleveland Federal Reserve President Loretta Mester said she would be "comfortable" raising interest rates at this point if the economy maintained its current pace of performance.
Investors awaited comments from a trio of Fed speakers later Tuesday, including Minneapolis Fed President Neel Kashkari, Philly Fed Chief Harker and San Francisco Fed President John Williams, for further indications on the likelihood of a March rate hike.
Market players are also looking ahead to Wednesday's minutes of the Fed’s latest policy meeting.
Fed Chair Janet Yellen said last week that the U.S. central bank will likely need to raise interest rates at an upcoming meeting, although she flagged considerable uncertainty over economic policy under the Donald Trump administration.
Fed fund futures priced in about a 27% chance of a rate hike in March, according to Investing.com’s Fed Rate Monitor Tool. Odds of a May increase was seen at around 50%, while June odds were at 73%.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Both a strong dollar and higher interest rates are typically bearish for gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.
Also on the Comex, silver futures for March delivery dropped 14.7 cents, or 0.8%, to $17.88 a troy ounce.
Meanwhile, platinum was down 1.2% to $993.75, while palladium slumped 1.7%, to $766.15 an ounce.
Elsewhere in metals trading, copper futures rose 3.8 cents, or about 1.4%, to $2.745 a pound, as concerns over supply disruptions in Chile and Indonesia supported prices.
Prices of the red metal rallied to a 20-month peak of $2.822 last week after strikes at BHP Billiton (LON:BLT)'s Chilean Escondida and Freeport McMoran (NYSE:FCX)'s Indonesian Grasberg mine.
Combined, the mines produce roughly 10% of the world's total copper supply.