By Stephanie Yang and Katherine Dunn

Gold prices fell to an eight-month low Wednesday, weighed down by a rising U.S. dollar and expectations for an interest-rate increase in December.

Gold for December delivery settled down 1.8% at $1,189.30 a troy ounce on the Comex division of the New York Mercantile Exchange, its lowest close since Feb. 5.

The WSJ Dollar Index was recently up 0.6% at 91.86, and traded at the highest level since 2002. A strong U.S. currency makes dollar-denominated gold more expensive for foreign buyers.

Stronger-than-expected economic data Wednesday helped boost the dollar and supported the possibility of an interest-rate increase at the next Federal Reserve policy meeting. U.S. durable-goods orders rose 4.8% from a month earlier, the biggest jump in a year and a positive sign for factories and manufacturing.

"The stronger dollar, equities and higher U.S. rates continue to nudge the longs out of the market," said Peter Hug, global trading director at Kitco Metals, in a Wednesday note.

Minutes from the Fed's November meeting, released on Wednesday, showed little change in policy plans. Officials said an interest-rate increase was possible "relatively soon" if economic data continued to show growth. Higher rates tend to weigh on gold, which pays its holders nothing and struggles to compete with yield-bearing assets when borrowing costs rise.

"We don't think there's any doubt that the Fed will hike rates in December," said Simona Gambarini, a commodities economist at Capital Economics in London.

According to the CME Group's FedWatchTool, 93.5% of traders expect the central bank to raise rates in December.

Traders noted that the shortened holiday week due to Thanksgiving may add to volatility in a market with fewer participants. As the holiday season nears, traders will likely become increasingly cautious, said Joni Teves, a strategist at UBS, in a note.

"Many [investors] are likely sidelined at this point, unwilling to take strong positions both in terms of size and time frame ahead of year-end, " said Ms. Teves.

Write to Stephanie Yang at stephanie.yang@wsj.com and Katherine Dunn at Katherine.Dunn@wsj.com

(END) Dow Jones Newswires

November 23, 2016 14:52 ET (19:52 GMT)

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