By Tatyana Shumsky and Katherine Dunn

Gold prices fell to a one-week low on Thursday as a stronger dollar and concerns about higher interest rates in the U.S. weighed on traders' appetite for the haven asset.

The most actively traded contract, for December delivery, fell $9.10, or 0.8%, to settle at $1,124.50 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices have been hitting five-year lows in recent weeks as many traders wagered that the Federal Reserve would soon tighten monetary policy, ending a historic period of near-zero interest rates. The move would spell trouble for gold, which benefited from the U.S. central bank's easy money stance. Gold doesn't pay interest or dividends and has an easier time competing with assets that do, like U.S. Treasury bonds, when rates are low.

A stronger dollar, which rallied against the euro, weighed on gold prices on Thursday. The dollar rallied against the euro in response to European Central Bank comments that it stands ready to expand its stimulus measures to buttress the region's economic growth.

"That creates this difference between Europe and the U.S. ... if the rest of the world is in stimulus mode and you're standing firm, it creates strength in the dollar and that has a tendency to pressure commodities," said Dave Meger, director of metals trading at High Ridge Futures in Chicago.

Like other commodities, gold is traded in dollars and becomes more expensive for investors who use other currencies to fund their purchases of the precious metal.

Monetary stimulus is generally supportive for gold and tends to lift the precious metal's value in terms of the local currency, Mr. Meger said. Gold denominated in euros was recently trading at EUR1013.80, the highest level since Friday.

Gold traders are also focusing on upcoming U.S. nonfarm payrolls data, due on Friday, said Simona Gambarini, a commodities economist at Capital Economics. The U.S. central bank's dual mandate, maximum employment and stable prices, means officials keep close watch on the key indicator of labor market health when making monetary-policy decisions.

"That's an important data point to establish whether the Fed will raise rates" this month, Ms. Gambarini said. "So there's a bit of volatility because of that."

 
Settlements: 
LBMA Gold Fix PM $1,128.00; Previous $1,137.75 
Dec gold $1,124.50, down $9.10; Range $1,121.00-$1,133.80 
Dec silver $14.707, up 4.0 cents; Range $14.550-$14.950 
Oct platinum $1,010.10, down $3.50; Range $1,002.90-$1,024.00 
Dec palladium $581.55, down $1.80; Range $572.50-$592.15 
 

Write to Tatyana Shumsky at tatyana.shumsky@wsj.com and Katherine Dunn katherine.dunn@wsj.com

(END) Dow Jones Newswires

September 03, 2015 16:20 ET (20:20 GMT)