Gold extended losses on Thursday, after falling to a more than seven-month low a day earlier, as the dollar continued to gain on rising bets of U.S. rate hikes this year.
Spot gold was down 0.5% at $3,980.88 per ounce, as of 0738 GMT. U.S. gold futures for August delivery fell 0.3% to $3,996.50.
Bullion fell below the $4,000 level for the first time since November 2025 on Wednesday, and is down 29% from a record high of $5,594.82 reached on January 29.
"Gold is simply in a bearish momentum trade at this point amid a strong U.S. dollar environment," said Matt Simpson, a senior analyst at StoneX.
High U.S. inflation, fuelled by the Iran war, and a hawkish Fed have contributed to expectations of a rate hike.
Traders expect three Fed rate hikes this year and are pricing in about a 67% chance of a September increase, according to the CME FedWatch Tool. Bullion-backed exchange-traded funds could face renewed outflows if expectations rise for rate hikes, analysts say.
While gold is traditionally seen as an inflation hedge, it loses its appeal as a non-yielding asset in a high-interest-rate environment.
The dollar held firm near a 13-month high, making gold more expensive for buyers holding other currencies.
Investors now await the U.S. Personal Consumption Expenditures data, the Fed's preferred inflation gauge, due later in the day, for further cues on monetary policy.
They also continue to monitor the Middle East as Lebanon and Israel discussed a U.S.-backed proposal for Israeli forces to transfer some of the Lebanese territorycaptured in their war with Hezbollah to Lebanon's military.
Spot silver fell 1% to $56.85 per ounce and platinum lost 1.4% to $1,556.60, both hovering near their lowest levels since November 2025. Palladium inched 0.5% higher to $1,171.96 but was near a nine-month low. - Reuters
