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By Bloomberg

Gold held near a three-week low as the U.S. economy expanded more than estimated, boosting the case for higher interest rates. Holdings in the biggest exchange-traded fund backed by the metal fell the most in 18 months.

Bullion for immediate delivery was at $1,179.16 an ounce by 3:24 p.m in Singapore from $1,176.57 yesterday. Prices fell on Dec. 22 to $1,170.76, the lowest since Dec. 1. Futures on the Comex were at $1,179.10 an ounce from $1,178 yesterday.

Gold fell 1.9 percent this year after losing 28 percent in 2013 as prospects for higher U.S. borrowing costs amid accelerating growth and a plunge in oil prices cut demand for an inflation hedge. The economy expanded at a 5 percent annual rate in the third quarter, the biggest gain since 2003. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, reached a five-year high yesterday.

“The sentiment is still kind of cautious and that’s probably understandable considering we’re moving to a tightening cycle in the U.S,” said Mark Pervan, head of industry economics and research at Australia & New Zealand Banking Group Ltd. in Melbourne. Gold “gets the strongest headwind from a firmer U.S. dollar and strengthening U.S. interest rates.”

The dollar index fell 0.2 percent today after rising yesterday to the highest close since March 2009. Assets in the SPDR Gold Trust fell 1.6 percent to 712.9 metric tons yesterday, the biggest loss since June 2013, data compiled by Bloomberg show.

Silver for immediate delivery advanced 0.3 percent to $15.8121 an ounce. Palladium dropped 0.2 percent to $812.35 an ounce, and platinum traded at $1,193 an ounce from $1,193.13 yesterday.