Gold dropped to a seven-week low on Wednesday, driven by expectations of an early interest rate hike by the US Federal Reserve.

    Spot gold was up 0.1% at $1,227.90 per ounce by 3.17am GMT. The metal fell to $1,223 earlier in the session, its lowest since April 7. US gold futures dipped 0.1% to $1,228.30.

    Adding to the woes of the safe-haven bullion, the dollar stood near a two-month peak against a basket of major currencies on Wednesday after robust US housing data supported the case for the Fed to raise rates in the near term. A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

    The growing confidence towards a pick-up in US economic growth got a boost on Tuesday as official data suggested new US single-family home sales have hit the highest in eight years. The recent negative undertone for gold notwithstanding, some analysts believe a rate increase as early as June seems unlikely and would be discounted by traders, stabilizing the yellow metal.

    Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.44% to 868.66 tones on Tuesday, the first decline in a month. Among other precious metals, spot silver rose 0.3%, to $16.25 an ounce. It dipped as low as $16.14 earlier in the session, its lowest in five weeks.

    Spot palladium fell 0.5%, to $529.50 an ounce, after hitting a twelve-week low of $528.97 earlier in the day. Spot platinum was trading at $1,000.35 per ounce after touching a five-week trough of $992.