By Stephanie Yang 

Gold prices fell to a four-week low on Wednesday as concerns over the possibility of an interest-rate increase drove nervous investors to close out bets on the precious metal.

Gold for December delivery settled down 1.2% at $1,329.70 a troy ounce on the Comex division of the New York Mercantile Exchange, its biggest one-day loss since Aug. 5. Prices hit the lowest level since July 27 during the trading session.

Traders have been looking to Friday for more clues on the timing of the next rate increase, as Federal Reserve Chairwoman Janet Yellen is scheduled to speak at the Jackson Hole Symposium. While the market largely doesn't expect an imminent rise in interest rates, any surprises in the comments from Ms. Yellen could catch investors off guard and hit gold prices.

To prepare, investors have been dialing down bullish bets on gold ahead of Friday, said Peter Hug, global trading director at Kitco Metals.

"People are probably positioned a little longer than they want to be. They don't want to get caught and so they are taking a little bit off the table," Mr. Hug said.

Gold has risen 25% year to date, as the Fed has pushed back expectations for a rate increase and investors have sought out safe-haven assets. Higher rates tend to weigh on gold, since the metal pays its holders nothing and struggles to compete with yield-bearing assets such as Treasurys when borrowing costs rise.

A stronger dollar also hurt gold prices Wednesday, with the WSJ Dollar Index recently up 0.2% at 85.85. Gold is priced in the U.S. currency and becomes more expensive to foreign buyers as the dollar rises.

Write to Stephanie Yang at stephanie.yang@wsj.com

(END) Dow Jones Newswires

August 24, 2016 15:05 ET (19:05 GMT)

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