OREANDA-NEWS. Gold fell to a three-month low on Tuesday due to the dollar's rise to its highest in nearly 12 years and renewed expectations of a mid-year interest rate rise in the United States.

Spot gold dropped to its lowest since Dec. 1 at \$1,155.60 an ounce in early trade and was down 0.2 percent to \$1,163.45 by 1505 GMT, while US gold for April delivery was down \$3.80 an ounce at \$1,163.00.

Platinum fell to a new near-five-year low of \$1,125.75 an ounce.

The metal has dropped 5.1 percent since the start of the year on expectations of lower demand from the automotive sector and higher mine supply.

Gold is going to remain under pressure, "given that the drums have started beating that the Fed could increase the interest rate soon," said Naeem Aslam, chief market analyst at broker AvaTrade. Gold took a hit after Friday's strong US non-farm payrolls data boosted expectations that the Federal Reserve would begin increasing interest rates by the middle of the year.

The Fed has kept rates near zero since December 2008, boosting gold. But when the central bank started to signal it was looking to tighten its loose monetary policy, the metal began to fall.

Comments from a top Fed official fuelled those expectations. Richard Fisher, president of the Dallas Federal Reserve Bank, said the US central bank should promptly end its easy monetary policy and press ahead with raising rates.

The dollar climbed to its highest since September 2003 against a basket of major currencies, making gold more expensive for holders of other currencies. "The trend is your friend and people will continue to sell rallies," Deutsche Boerse's MNI senior analyst Tony Walters said.

"Seemingly the only spanner that could be thrown into the works at the moment is if the Fed doesn't raise rates in June, but the market is short ... and it continues to go in its favour." Investors were also eyeing talks over the Greek debt crisis, where prolonged uncertainty could help safe-haven bullion. Investor positioning indicated a bearish outlook.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.43 percent to 753.04 tonnes on Monday.

Spot silver fell to its lowest in two months at \$15.57 an ounce. Palladium dropped 1.9 percent to \$804.25 an ounce.