Gold prices touched a more than one-year low on Thursday as the prospect of aggressive policy tightening by major central banks weighed on the non-interest-bearing metal's appeal, while investors awaited European Central Bank's policy announcement, reports Reuters.
Spot gold fell 0.8 per cent to $1,682.49 per ounce by 1106 GMT, hitting its lowest level since end-March 2021.
US gold futures fell 1.2 per cent to $1,680.10.
The ECB was earlier signalling a 25-basis-point interest rate hike at its policy meet on Thursday, however a bigger-than-flagged move is also seen as likely amid soaring inflation.
"Gold remains as sensitive as ever to central bank hikes, and expect it to take another knock today if the ECB raise rates by 50 bps as concerns morph into reality," City Index senior market analyst Matt Simpson said.
The metal is also seeing a secondary reaction to the fact that it fell below $1,700, a key level some had assumed would hold longer than it did, Simpson added.
The US Federal Reserve, too, is widely expected to raise rates by 75 basis points at its policy meeting next week.
Higher rates raise the opportunity cost of holding gold, which yields no interest, while safe-haven bullion is also viewed as a hedge against inflation.
The US dollar ticked higher making the bullion more expensive for those holding other currencies.
"Clearly inflation expectations are receding because the Fed and other central banks are embarking on aggressive tightening regime, which is undermining gold's appeal," said Ilya Spivak, a currency strategist at DailyFX.
