By Ira Iosebashvili 

Gold prices fell to their lowest level in more than two months Wednesday, amid growing expectations that the Federal Reserve is getting ready to raise interest rates in coming months.

Gold for December delivery was recently down 0.4% at $1,311.17 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest price since June 24.

Expectations for a rate increase received a boost in recent days, after top Fed officials waxed optimistic about the U.S. economy.

Bets on federal-funds futures, a popular vehicle for expressing views on the central bank's policy outlook, showed investors assigned a 27% likelihood of the Fed raising rates by September, up from 24% a day before, according to CME Group data.

Gold, which pays its holders nothing, struggles to compete with yield-bearing investments when rates rise.

For gold, "the path of least resistance continues to be lower," said Peter Hug, global trading director for Kitco Metals in a note to clients.

A strong U.S. employment report on Friday would help solidify expectations of rate increase, boosting the dollar and driving gold lower, analysts said.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others was recently at 87.14, its highest level since late July.

Gold is priced in the U.S. currency and becomes more expensive to foreign buyers when the dollar rises.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

(END) Dow Jones Newswires

August 31, 2016 11:34 ET (15:34 GMT)

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