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Gold prices extended losses to an over one-week low on Thursday as the U.S. dollar and Treasury yields rallied after U.S. Federal Reserve Chairman Jerome Powell signalled an interest rate hike in March.

Spot gold fell 0.2% to $1,815.07 per ounce by 1024 GMT, after dropping nearly 1.6% in the previous session. U.S. gold futures fell 0.8% to $1,815.60.

"The reaction was normal in the sense that Chairman Powell stressed the strength of the economy and the determination to fight inflation," said Carsten Fritsch, a commodities analyst at Commerzbank. Powell struck a hawkish tone on Wednesday, flagging a rate increase in March, sending the U.S. Benchmark 10-year yields to near one-week highs, while the dollar rose to its highest level in over a month.

Higher yields and interest rate hikes dent the appeal of bullion by raising the opportunity cost of holding non-interest paying gold. During the past few days, gold benefited from the weakness in the equity market, underpinning its status as safe haven - but after the Fed comments both gold and equities sold off, which means the economic outlook as presented by the Fed is so much more important for the gold market, Fritsch added.

Gold prices have declined about 2.5% since hitting its highest in 10 weeks on Tuesday. "The market right now just needs to increase the risk of a faster pace of rate hikes, but at the same time faster pace of rate hikes potentially into a slowing economic outlook and inflation is not going down anytime soon," said Saxo Bank analyst Ole Hansen, which should support gold as a hedge against some of these developments.

Spot silver fell 0.8% to $23.30 an ounce. Platinum inched up 0.1% to $1,031.84, and palladium was up 1.4% to $2,361.95.