(Updates prices in the second and final paragraphs.)
Gold traded at a seven-month low midafternoon on Wednesday as the dollar continued to strengthen on expectations the Federal Reserve will raise interest rates this year to slow rising inflation.
Gold for August delivery was last seen down 3.2% to US$4,032.90 per ounce, the lowest since early November.
The price of the precious metal has dropped 4.9% in the week since the Fed's policy committee ended its two-day meeting leaving interest rates unchanged but warned rates might rise this year as inflation continues climb on higher energy costs. The likelihood of higher rates is boosting the dollar and moving investors away from gold since it pays no interest.
Falling oil prices since the U.S. and Iran are easing some inflation concerns, however weaker U.S. stock markets are also weighing on gold.
"Gold fell for a second session, pressured by a stronger dollar amid a technology-led equity selloff," Saxo Bank wrote in a note. "Limited support came from rising Treasury bonds as lower energy prices ease concerns about inflation and reduce the need for additional Fed tightening. Instead, gold's unusually strong positive correlation with the S&P 500 continues to weigh on prices, pushing the metal into the key USD 4,000-4,100 support zone."
The dollar continued its rise early, with the ICE dollar index last seen up 0.22 points to 101.63, the highest in more than a year. Treasury yields eased, with the yield on the US two-year note last seen down 5.0 basis points to 4.148%, while the 10-year note was paying 4.402%, down 10.0 points.