LONDON- Gold extended its downtrend on Wednesday, sinking to the lowest in a year on a buoyant dollar and falling oil prices, but some analysts said bullion is close to bottoming out.

Gold has shed over 10 percent since touching a peak of $1,365.23 an ounce in mid-April, weighed down by a stronger dollar, rising U.S. interest rates and trade tensions.

Spot gold was down 0.3 percent at $1,223.11 an ounce by 1000 GMT after touching its weakest since July 14 last year at $1,220.81 an ounce.

U.S. gold futures for August delivery shed 0.3 percent at $1,223.30 an ounce.

"In this environment where we also see oil prices falling, and so less concern from investors about rising inflation, that's another negative for the gold price," said Jens Pedersen, senior analyst at Danske Bank in Copenhagen.

Gold is regarded as a hedge against inflation.

Oil benchmark Brent crude hit a three-month low on Wednesday after a rise in U.S. crude inventories highlighted increasing global supply and concerns over weak demand. 

The dollar rose across the board on Wednesday, climbing to a six-month high against the yen, after U.S. Federal Reserve Chairman Jerome Powell gave an upbeat outlook for the U.S. economy.

Higher interest rates tend to boost the dollar and push up bond yields, making greenback-denominated gold more expensive for holders of other currencies and denting its appeal.

"With the USD on a solid footing, gold prices should stay pressured lower for the foreseeable future as gold has wholly lost its glittering appeal in this enduringly bullish equity and USD environment," said Stephen Innes, APAC trading head at OANDA in Singapore.

However, Pedersen said he expected dollar strength to wane and other factors to help gold stabilise.

"There are still some concerns about the geopolitical environment, the situation in Italy for example, so if these stories start to flare up again, it could lead investors back into gold," he said.

Among other precious metals, silver slipped 0.9 percent to $15.41 an ounce, after touching $15.38 per ounce, its lowest since July 10 last year.

Platinum lost 0.7 percent to $806.50 an ounce, and hit a two-week low of $798.14 an ounce earlier in the session.

Palladium dipped 0.3 percent to $908.53 per ounce after hitting $903.97, the weakest since April 9.

(Additional reporting by Karen Rodrigues in Bengaluru, Editing by William Maclean)