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(Bloomberg) — Gold traded near the lowest level in three months after the dollar strengthened to a decade-high on expectations that the Federal Reserve will raise U.S. interest rates as the world’s largest economy improves. Bullion for immediate delivery was at $1,163.55 an ounce at 8:18 a.m. in Singapore from $1,161.84 on Tuesday, according to Bloomberg generic pricing. Gold fell to $1,155.30 on March 10, the lowest level since Dec. 1, as the dollar extended gains. The metal erased its 2015 gain last week after a report on Friday showed the U.S. jobless rate at the lowest in almost seven years. The Bloomberg Dollar Spot Index advanced for a fifth day on Tuesday as the better-than-expected employment data spurred speculation that interest rates will climb. Fed Bank of Dallas President Richard Fisher warned this week that delaying higher borrowing costs risked recession.
“The possibility of further U.S. dollar gains is weighing on gold,” James Steel, an analyst at HSBC Securities (USA) Inc. in New York, wrote in a note. “Asian demand is emerging and may lend support for prices.” Policy makers are better off tightening earlier and more gradually than later and more quickly, Fisher said on Monday. Fed policy makers meet March 17-18. Higher rates damp the appeal of gold, which generally offers returns through price gains. Gold for April delivery rose 0.3 percent to $1,163 on the Comex, rebounding from a three-month low on Tuesday. Investors sold holdings in gold-backed exchange-traded funds for a ninth day on March 9, the longest streak since November.
Silver for immediate delivery was at $15.6796 an ounce from $15.6727 on Tuesday, when prices fell for a seventh day. Spot platinum was at $1,129.50 an ounce from $1,128.63 on Tuesday, when the metal dropped to $1,128, the lowest price since 2009. Palladium added 0.3 percent to $805.25 an ounce.

To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net Jake Lloyd-Smith, Ovais Subhani