Gold slid to its lowest level in a month on Monday as the dollar rose to 16-month highs, boosted by the U.S. Federal Reserve`s hawkish interest rate policy and political uncertainty in Europe.
U.S. gold futures
Last week, the metal posted its biggest weekly decline since August after the Fed reaffirmed its monetary tightening stance, seen as a negative for non-yielding bullion.
"Of the hawkish message we got from the Fed last week, we are now seeing the aftermath," said Bart Melek, head of commodity strategies at TD Securities.
"We are now right below the 50-day (moving average) at $1,210. Trading range right now is $1,180 to $1,240 and we are going to need a catalyst to get us moving higher up."
The Fed last week indicated it planned to raise rates next month and remained on track for two more potential hikes by mid-2019 on the back of an upbeat economy and rising wage pressures, lifting the dollar.
The dollar index <.dxy>, which measures the greenback against a basket of six major currencies, rose to its highest since June 2017, denting gold`s appeal by making it more expensive for holders of other currencies to buy the metal. [USD/]
Gold prices have fallen about 12 percent since a peak in April after investors preferred the dollar as the U.S.-China trade war unfolded against a background of higher U.S. interest rates.
In Britain, doubts that the government will be able to secure a Brexit agreement, as well as Rome facing a Tuesday deadline to submit a revised Italian budget to the European Union, also supported the dollar. [MKTS/GLOB]
"The main driver (for gold) has been some renewed dollar strengthening... due to political uncertainty in UK and Italy," said Saxo Bank analyst Ole Hansen, adding that $1,200 is "both the psychological and technical level of support" for the metal.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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