Singapore: Gold dropped for the fourth session in five on Thursday after the Federal Reserve painted a bullish picture of the US economy, signalling it was on course to lift interest rates this year.
The prospect of an increase in US rates makes non-interest-bearing assets such as gold less attractive and that helped pull bullion further away from a five-month peak reached last week.
"People are already adjusted to the new policy stance and there`s no further reason to push up gold to a much higher level," said Mark To, head of research at Hong Kong`s Wing Fung Financial Group.
In Wednesday`s policy statement, the Fed said the US economy was expanding "at a solid pace" with strong job gains, leaving the central bank on track to raise rates this year. But it repeated it would be "patient" in deciding when to raise benchmark borrowing costs from zero.
Spot gold was down 0.3 percent at $1,281.10 an ounce at 0312 GMT, adding to a 0.6 percent decline in the previous session. Gold hit a five-month high of $1,306.20 on Jan. 22.
U.S. gold for February delivery eased 0.4 percent to $$1,281.30 an ounce.
The dollar was firmer against a basket of currencies and not far from an 11-year peak reached last week as dollar bulls focused on the positive in the Fed`s statement.
The Federal Open Market Committee said it would take "financial and international developments" into account when determining when to raise rates, referencing global markets for the first time since January 2013. But analysts say that does little to alter market expectations of a mid-year rate increase.
"Overall, there is little to signal a shift from expecting the first hike to come in June," Mizuho Bank said in a note.
Investors will be watching US gross domestic product data on Friday for more clues on the strength of the economy.
Some economists say a drop in US business investment spending for the fourth straight month in December suggested a risk that fourth-quarter economic growth could fall short of forecasts that mostly hover around a 3.0 percent annual pace.