* Silver hits lowest in over 7 weeks
* Speculators cut bullish bets on gold, silver
* Gold could touch $1,320 per ounce - technicals (Updates prices)
By Sethuraman N R
Aug 22 (Reuters) - Gold fell on Monday to its lowest in nearly two weeks as the dollar strengthened after comments from U.S. Federal Reserve officials increased bets on a U.S. rate hike this year.
Spot gold XAU= was down 0.6 percent at $1,332.80 an ounce as of 0642 GMT, after touching a low of $1,331.35, a level not seen since Aug. 9.
U.S. gold GCcv1 dropped 0.7 percent to $1,337.20 an ounce.
The Fed is close to hitting its targets for full employment and 2 percent inflation, the Fed's No. 2 policymaker Stanley Fischer said on Sunday. U.S. economic indicators are looking healthy and the probability of a U.S. rate hike will go up further in the coming months, rallying the dollar and putting pressure on gold," said OCBC Bank analyst Barnabas Gan.
There has been some shifting of funds from gold as oil prices rallied, but the movement will not last long, Gan added.
The dollar index .DXY , which tracks the greenback against a basket of six major rivals, was up 0.4 percent at 94.894.
"The weekend remarks out of the Bank of Japan (BOJ) provided support to the dollar this morning, most pronounced in a sharp move lower in silver," trading firm MKS PAMP Group said in a note.
The Sankei newspaper reported over the weekend that the BOJ would not rule out deepening a cut to negative rates, quoting Governor Haruhiko Kuroda. conflicting signals from the Fed in recent days, central bankers from around the world will gather from Aug. 25 for an annual meeting in the mountains of Jackson Hole, Wyoming, with Chair Janet Yellen due to speak the following day. think that a September move might be too early for the Fed to act, but by the same token, a December move could be late," said INTL FCStone analyst Edward Meir.
Given that an imminent move is now close with just timing being up in the air, gold might struggle over the short-term, Meir added.
A stronger dollar discourages gold-buying by making the metal more expensive for holders of other currencies.
Spot gold is expected to drop deeply to $1,320 per ounce, according to Reuters technical analyst Wang Tao. again decreased their bullish positions in COMEX gold and silver contracts in the week to Aug. 16. silver XAG= hit a seven-week low of $18.77 an ounce and was last down over 2 percent.
Platinum XPT= was down 0.6 percent at $1,104, while palladium XPD= fell 0.7 percent to $702.73.