Gold fell for a third straight session on Wednesday on pressure from a firmer dollar amid speculation that the next U.S. Fed chair may be a policy hawk.
Spot gold was down 0.4 percent at $1,280.13 an ounce, earlier touching its lowest since Oct. 9 at $1,279.
U.S. gold futures for December delivery were off 0.3 percent at $1,282 per ounce.
"Interest rate hikes had not been fully priced in for next year. That has changed massively following speculation that (Fed Governor Jerome) Powell might become the next chairman," said Carsten Fritsch, an analyst at Commerzbank.
U.S. President Donald Trump has a pool of five candidates to choose from for the next chair of the Fed and is likely to announce his choice before going to Asia in early November, a source familiar with the situation said. Jerome Powell will likely be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll - but most of them said Yellen would be the best option.
The dollar edged higher on the Fed chair speculation and as the market waited for more detail on Trump's tax reform. The U.S. central bank is widely expected to raise interest rates for the third time this year in December. Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.
"With dollar strength in mind, it would present further risks to gold, but I'm waiting to see how the Catalonia crisis unfolds tomorrow, pinpointing a possible next move for gold, in either direction," said Jameel Ahmad, vice president of market research at FXTM.
Catalonia refused on Tuesday to bow to the Spanish government's demand that it renounce a symbolic declaration of independence, setting it on a political collision course with Madrid later this week. Gold is often used as a store of wealth in times of political or economic uncertainty.
MKS precious metals trader Sam Laughlin said the $1,280 per ounce support remained intact but further weakness may see the 100-day moving average at $1,275 tested. He said support below that level sat between the early October low of $1,260 and the 200-day moving average at $1,257.
In other precious metals, silver was down 0.3 percent at $16.93 an ounce, after touching a one-week low in the previous session. Platinum slipped 0.8 percent to $922.75 an ounce, while palladium was slightly weaker at $977.75.
Oil prices rose on Wednesday, lifted by a fall in U.S. crude inventories and concerns that tensions in the Middle East could disrupt supplies.
Brent crude futures, the international benchmark for oil prices, were at $58.27 at 01:31 GMT, up 39 cents, or 0.7 percent from their last close - and a third above mid-year levels.
U.S. West Texas Intermediate (WTI) crude futures were at $52.08 per barrel, up 20 cents, or 0.4 percent and almost a quarter above mid-June levels.
Traders said that prices were pushed up by a drop in U.S. crude inventories as well as concerns that fighting in Iraq and mounting tensions between the United States and Iran could affect supplies.
U.S. crude inventories fell by 7.1 million barrels in the week to Oct. 13 to 461.4 million barrels, the American Petroleum Institute (API) said late on Tuesday."
API data from the U.S. overnight showed a big draw...If $52.83 in WTI and $59.22 in Brent give way, then oil is stepping into a new and much higher range," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Official U.S. fuel inventory data is due to be published later on Wednesdayby the Energy Information Administration.
Adding to a tightening U.S. market, tensions in the Middle East meant that a risk premium was being priced into oil markets. Iraqi government forces captured the major Kurdish-held oil city of Kirkuk earlier this week, responding to a Kurdish independence referendum, and there are concerns that fighting could disrupt supplies.
"In the case of Kurdistan, the 500,000 barrel-per-day (bpd) Kirkuk oil field cluster is at risk," U.S. bank Goldman Sachs said on Tuesday.
The Iraq crisis adds to a looming dispute between the United States and Iran. Last Friday U.S. President Donald Trump last week refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran.
During the previous round of sanctions against Iran, some 1 million bpd of oil was cut from global markets.