Gold prices fell on a stronger dollar on Thursday, hovering close to a six-month low as the U.S. Federal Reserve Chair confirmed an outlook for higher interest rates in the United States.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $7.1 or 0.56%, to $1,267.40 a troy ounce by 1:13AM ET (05:13 GMT).  

The U.S. dollar index that monitors the value of the greenback relative to a basket of six currencies stood at 94.92, up by 0.15%.

Dollar-denominated assets such as gold are sensitive to moves in the dollar – A rise in the dollar makes gold more expensive for holders of foreign currency and thus, reduces demand for the precious metal. 

Meanwhile, long-term Treasury yields also recovered from three-week lows on Wednesday, supporting the dollar’s rise on Thursday. 

Federal Reserve Chairman Jerome Powell said on Wednesday that the U.S. central bank should continue with a gradual pace of rate increases, which also supported yields. Powell said during a meeting of central bank chiefs in Portugal that trade tensions could cause damage to the global economy. 

U.S. President Donald Trump said on Thursday he expects to announce new trade deals with certain unspecified countries soon.

On Monday, he ordered the U.S. Trade Representative to identify $200 billion worth of China goods for additional tariffs. The news triggered a sell-off in equities and was cited as a supportive for gold prices.