By Asha Sistla

(Reuters) – Gold prices dropped on Wednesday following hawkish statements by U.S. Federal Reserve officers and cautious traders awaiting the minutes from the U.S. central banking’s latest meeting.

as at 0612 GMT it had fallen 0.3% to $1,918.74 a pound. U.S. prices were 0.2% lower at $1,923.10.

Matt Simpson, senior market analyst at City Index said that the stronger U.S. Dollar and lack of safe haven demand were limiting its upside potential. “Each rally from $1,916 support does not hold any gains as the U.S. dollar continues to strengthen.”

“Price action is still choppy and it’s hesitant to make a commitment to one direction.”

As Fed officials tried to reduce the bank’s over-inflated balance sheet quickly, it was deemed necessary. One of them expressed openness for rate hikes of up to half of a percentage point. [USD/]

Gold is less desirable for currency holders who have a stronger dollar.

Simpson stated that yesterday’s hawkish remarks by key Fed members will likely outshadow today’s FOMC minutes. They point to a 50-bp increase at the FOMC next meeting, and a quicker balance sheet reduction than expected.

Minutes of the Fed’s meeting last month, which are due to be available at 1800 GMT, could provide more detail about policymakers’ thoughts on how fast they can reduce bondholdings or raise interest rates. Fed has become more hawkish in its stance.

U.S. Treasury yields reached multi-year records, while longer-term yields moved faster and partially reversed some recent U.S. curve inversions. [US/]

Rising U.S. rates of interest and higher yields are highly sensitive to gold, which increases the opportunity cost for holding non-yielding currency while also boosting the dollar.

Spot silver fell 0.3% to $24.25 an ounce. Platinum dropped 0.4% at $964.19, and palladium rose 0.2% to $2,242.04.