Gold bars are pictured at the German central Bank Bundesbank, in Frankfurt am Main, western Germany Boris Roesseler/AFP

Gold prices continued to drop on Friday (3 March) with the market pricing in a 90% chance of an interest rate hike by the US Federal Reserve which sent the dollar higher against major currency crosses.

At 3:48pm GMT, the Comex gold futures contract for April delivery was down 0.48% or $5.90 at $1,227.00 an ounce, while spot gold was trading at $1,225.31 an ounce, down 0.72% or $8.94; a far cry from $1,250-plus prices recorded at the start of the trading week.

FXTM research analyst Lukman Otunuga said growing speculation about US interest rates has exposed gold to downside shocks, with the metal booking its biggest one-day loss of 2017 during overnight.

"Sellers have exploited the repeated hawkish comments from Fed officials to pressure the yellow metal, while a strengthening dollar continues to cap upside gains.

"A scenario where the greenback continues to appreciate amid the improving sentiment towards the US economy could leave gold vulnerable to further losses. Although the concerns over political risks in Europe, Brexit woes and Trump developments attract."

Continuing with precious metals, silver bucked wide market bearishness on stronger industrial demand, with the Comex May contract up 0.15% or 3 cents to $17.78 an ounce. Spot platinum, however, had no such luck, sliding 0.29% or $2.91 to $985.09 an ounce.

Elsewhere, oil futures returned to positive turf, without showing any appreciable movement beyond the recent mid-$50 per barrel levels and demonstrated little appetite for a spike above $60.

At 3:58pm GMT, the Brent front month futures contract was up 1.36% or 75 cents to $55.83 per barrel, while the West Texas Intermediate (WTI) was 1.29% or 68 cents higher at $53.29 per barrel, as upside risk of Opec cuts continues to cancel the downside drag of higher US production reflected in the data.

Meanwhile, the US Energy Information Administration (EIA) reported commercial crude oil inventories rose by 1.5m barrels for the week ending 24 February, yet another record high. The EIA also said total domestic US crude oil production also rose slightly from the previous week to 9.03m bpd, with inland gains reported in both shale and in Alaska.

Fawad Razaqzada, market analyst, said the all-time high crude stockpile levels in the US remain the number one reason behind oil's inability to move further higher in recent weeks.

"With net long positions (i.e. bets to the upside) on both contracts being at record high levels, it could be that money managers and other large speculators are beginning to unwind those positions, providing additional pressure on prices. Also, the fact that there were no further cuts in Russian oil production in February means it will take a little bit longer for the global oversupply to drain."