Gold prices dropped Wednesday and were on track to snap a five-session winning streak, weighed by a rebound in the dollar after minutes from the Federal Reserve's May meeting showed that most participants believed half-percentage-point rate increases would likely be appropriate in June and July.
Spot gold was down 0.7% at $1,853.73 per ounce as of 4:22 p.m.. ET. U.S. gold futures settled down 0.7% at around $1,852.50.
The dollar gained 0.3%, after hitting its lowest level in a month on Tuesday. A stronger dollar makes gold more expensive for overseas buyers.
All participants at the May 3-4 policy meeting backed the Fed's 50 basis point rate increase this month to combat inflation they agreed had become a key threat to the economy's performance and was at risk of accelerating without central bank action, the minutes of the session showed.
"The market is fixated on the Fed's path for rate hikes ... If the minutes signal couple more rate hikes, it could hurt gold. But if the Fed takes a cautious tone that would be good news for gold," said Edward Moya, senior analyst with OANDA, ahead of the minutes release.
Even though gold is often seen as a hedge against inflation, rate hikes erode its appeal as they tend to lift bond yields, raising the opportunity cost of holding zero-yield bullion.
Atlanta Fed President Raphael Bostic on Tuesday warned that headlong rate hikes could create "significant economic dislocation."
Meanwhile, European Central Bank President Christine Lagarde gained key allies for her plan to raise rates out of negative territory this summer.
Spot silver fell 1% to $21.86 per ounce, platinum shed 0.9% to $945.52 and palladium was down 0.2% at $2,003.29.
"Platinum and palladium are being kept in check by the ongoing problems in the automotive industry, which is slowing demand for these precious metals," Commerzbank analysts said in a note.