Gold slipped on Wednesday as the dollar strengthened amid speculation that the next U.S. Federal Reserve chief may be a policy hawk.
U.S. President Donald Trump has a pool of five candidates to choose from for the next chair of the Federal Reserve and is likely to announce his choice before going to Asia in early November, a source familiar with the situation said.
Current Fed Chair Janet Yellen, whose term expires in February, is one of the five candidates, the source said.
Spot gold was down 0.1 percent at $1,283.16 an ounce at 0800 GMT. It hit a one-week low of $1,281.31 on Tuesday.
U.S. gold futures for December delivery were off 0.1 percent at $1,285 per ounce.
The dollar edged higher as investors mulled the possibility of a likely hawkish Fed chair.
"All the rhetoric around that is that it`s more hawkish... Just few surprises hitting the market there and helping the dollar regain footing and keeping yields very steady, so really putting gold under pressure," a Hong Kong-based trader said.
Jerome Powell will likely be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll - but most of them said Yellen would be the best option.
The U.S. central bank is widely expected to raise interest rates for the third time this year in December.
Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.
"With dollar strength in mind, it would present further risks to gold, but I am personally waiting to see how the Catalonia crisis unfolds tomorrow, pinpointing a possible next move for gold, in either direction," said Jameel Ahmad, vice president of market research at FXTM.
Catalonia refused on Tuesday to bow to the Spanish government`s demand that it renounce a symbolic declaration of independence, setting it on a political collision course with Madrid later this week.
Jeffrey Halley, senior market analyst with OANDA, sees immediate support for gold at $1,281 and towards $1,260.
In other precious metals, silver was down 0.2 percent at $16.96 an ounce, after touching a one-week low in the previous session.
Platinum slipped 0.7 percent to $923.99 an ounce, while palladium gained 0.3 percent to $981.47.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)