 "Gold hits month low as Fed rate hike hint drives dollar")
Rising expectations that the US Federal Reserve will raise interest rates again this year drove gold to a month low on Wednesday, after its biggest one-day loss in almost two years during the previous session.
Platinum meanwhile hit parity with palladium for the first time since 2001 on diverging demand expectations. Platinum is used more heavily in the diesel engines that have fallen out of favour since 2015's Volkswagen emissions-rigging scandal.
Spot gold sank 0.7 per cent to $1,284.37 per ounce by 1354 GMT after tumbling 1.3 per cent in the previous session. Earlier it hit its lowest since August 25 at $1,282.23.
US gold futures for December delivery fell 1.1 per cent to $1,287.50.
The dollar touched a one-month high against a basket of currencies after Federal Reserve chief Janet Yellen said on Tuesday it would be "imprudent" to keep rates on hold until US inflation hits 2 per cent.
Markets are pricing in a 76 per cent chance the Fed will raise borrowing costs in December, compared with less than 20 per cent only a month ago.
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"At the moment the dollar is weighing on gold but it will not continue at this pace," Commerzbank analyst Carsten Fritsch said.
"The fact that there's going to be a rate hike in December will cap gains in gold, on the other hand North Korea will prevent a price decline, and there's the risk of a stock market correction."
Gold is highly-sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion versus the dollar.
In the equity markets, prices rose as US President Donald Trump's administration prepared to outline a new tax plan to boost growth, lifting assets perceived as risky over those seen as being safer, such as gold.
Limiting losses in gold, however, were lingering tensions between the US and North Korea.
"Gold lost what it gained on North Korea (tensions) since Friday after Yellen's comments," said Yuichi Ikemizu at ICBC Standard Bank in Tokyo.
"But I think the (North Korea) situation is more serious than the Fed's policies. So gold is supported around here and I expect prices to go back up to $1,300."
Silver was flat at $16.77 per ounce, having dropped 2.4 per cent in the previous session, its biggest one day fall since mid-August. Earlier, the metal hit its lowest since mid-August at $16.69.
Platinum fell 0.6 per cent to $916.70 per ounce, after slipping about 2 per cent in the previous session, its biggest fall since early July, and hitting a two-month low of $912.50.
Palladium rose 0.3 per cent to $917.72.