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U.S. gold futures were down about 0.1 percent at $1,214.

Gold prices were tepid on Wednesday pressured by a robust dollar after a senior U.S. Federal Reserve official reaffirmed the need for a further increase in interest rates, making bullion more expensive for holders of other currencies.

·       Fed Vice Chair Richard Clarida said on Tuesday the central bank should continue to gradually raise interest rates, but it was "especially important" to monitor economic data as monetary policy was getting close to a neutral stance.

·       "The strength of the U.S. dollar has been bad for gold, while the Fed is little more bullish about interest rates," said John Sharma, an economist with National Australia Bank (NAB).

Prospects of higher U.S. interest rates are negative for dollar-priced gold as they raise the opportunity cost of holding the bullion.

·       Investor attention is now turned towards Fed Chairman Jerome Powell's speech later on Wednesday and the minutes from the Fed's Nov. 7-8 meeting on Thursday, as they look for indications on U.S. rates hikes in 2019.

"After holding around $1,220/oz over the past week, gold prices finally capitulated as investor appetite weakened," ANZ analysts said in a research note, adding, rising trade tensions saw investors seeking a safe haven in the dollar and weighing on the precious metals complex.

·       The dollar index, a gauge of its value versus six major peers, held steady at 97.37, sitting just below this year's high of 97.69.

·       U.S. President Donald Trump is prepared to hike tariffs on Chinese imports if there is no breakthrough on longstanding trade dispute during a Saturday night dinner with Chinese leader Xi Jinping, White House economic adviser Larry Kudlow said on Tuesday.

·       Among other precious metals, spot silver inched up 0.1 percent to $14.15 per ounce, having fallen to a nearly-two-week low of $14.05 in the previous session.

Platinum was up 0.2 percent at $831.50 per ounce. Prices hit their lowest since Nov. 15 at $825.25 on Tuesday.

Palladium rose 0.1 percent to $1,152.00 per ounce.

·       Gold prices swooned as the US Dollar rallied to the highest level in a month, sapping the appeal of anti-fiat alternatives. The bulk of gold’s drop seemed to come courtesy of comments from Fed Vice Chair Richard Clarida, who described the economy as “healthy” and backed the current strategy of gradual interest rate hikes. He even warned about raising rates too slowly, as well as too fast.

This marks an important clarification of Mr Clarida’s earlier remarks – which markets interpreted as signaling a dovish shift in forward guidance – and brings him in line with the Fed policy status quo (as expected). The spotlight now turns to a speech from Fed Chair Jerome Powell. He seems likely to reiterate the case for further tightening. That may boost USD further, hurting gold by extension.

Reference: Reuters, CNBC