Aug 28 (Reuters) - Gold prices reversed course and fell over 1% on Friday, as traders increased bets on an interest rate hike after Federal Reserve Chairman Kevin Warsh's remarks on curbing inflationary pressure.
Spot gold was down 0.8% at $4,563.05 per ounce by 1452 GMT, after earlier hitting a one-week low of $4,528.94. U.S. gold futures for December delivery fell 1% to $4,615.10.
"Gold is getting slapped hard as Chair Warsh affirms that inflation isn't meaningfully slowing and the Fed has 'work to do.' While it may once again be 'speak loudly and carry a short stick' this will make the market price the September meeting as a coin flip," independent analyst Tai Wong said.
Traders added to bets on a September rate hike after Warsh said the Fed will "have work to do" if policymakers are not confident that underlying inflation is returning to its 2% target, marking the closest he has come to acknowledging interest rate hikes may be needed to ease price pressures.
Traders now see a 56% chance of a U.S. rate hike in September, compared to 36% before Warsh's comments, and an 80% chance of a December increase, according to the CME FedWatch tool.
The dollar rose to a over one-week high, making greenback-priced bullion more expensive for holders of other currencies.
The metal had hit a more than three-month high of $4,696.18 on Tuesday, building on a rally following the U.S. Treasury's announcement last week of support measures for long-duration bonds.
Gold tends to lose appeal in a high interest rate environment as it offers no yield.
Gold discounts in India plunged this week, as demand fell sharply on market speculation that the government could consider rolling back a recent hike in import duties.
Spot silver rose 0.3% to $69.48 per ounce, platinum was up 1.7% at $1,878.46 and palladium gained 7% to $1,444.75 an ounce.
Reporting by Pablo Sinha and Dharna Bafna in Bengaluru; Editing by Shilpi Majumdar and Tasim Zahid
