Gold prices fell on Thursday as the dollar strengthened, while investors assessed monetary policy signals from the US Federal Reserve and its chairman Kevin Warsh, following the central bank's decision to keep interest rates unchanged, as markets awaited US inflation data due later in the day.
The price of gold in spot trading fell by 0.6% to $4,040.88 an ounce, while US gold futures for December delivery fell 0.1% to $4,047.10.
The dollar held onto its gains, increasing the cost of gold, which is priced in US dollars, for holders of other currencies.
The Federal Reserve kept interest rates unchanged on Wednesday, as expected, preferring to postpone any adjustments to borrowing costs until after next week's midterm elections, pending further data on inflation, which the central bank described as still elevated.
According to the CME Group's FedWatch tool, traders expect a 78% probability of an interest rate hike in December, compared with 84% before the central bank's decision.
High interest rates increase the opportunity cost of holding gold, which does not generate returns, thus reducing its appeal to investors.
Markets are awaiting the release of personal consumption expenditures data, a key indicator closely watched by the Federal Reserve as it seeks to bring inflation back to its target level of 2%.
The European Central Bank is expected to keep interest rates unchanged on Thursday.
