Gold prices extended losses on Monday, dropping towards its lowest level in nearly six years as a broadly stronger U.S. dollar combined with growing confidence the US interest rate hike this year.
Gold for February delivery on the Comex dipped 50 cents, or 0.05%, to trade at $1,055.70 a troy ounce.
Spot gold slipped 0.2 per cent to $1,055.60 an ounce. It had dropped to $1,052.70 earlier in the session, within striking distance of $1,052.46, the lowest since February 2010, reached on Friday.
The precious metal has disgraced as investors position themselves for the first rate hike in the United States in nearly a decade. It is expected the Fed to raise rates at its next policy meeting on 15-16 dic.
Investors believe gold, as a non-interest-paying asset, will take a hit to demand from higher rates as the dollar gains.
The dollar index rose to its highest level since April, amid increasing expectations of tighter monetary policy in the United States in the months ahead. Listed commodities become more expensive for investors holding other currencies when the greenback gains.
Within the next week, investors will focus on Friday’s US non-farm payrolls in November, the latest jobs report before the Fed decides on interest rates at its meeting from 15 to 16 December.
Assets in SPDR Gold Trust, the world’s top gold-backed exchange-traded fund, dropped at its lowest level since September 2008 on Friday.
The strong dollar also kept a cover on any rise in gold prices.
At the Multi Commodity Exchange, gold for delivery in February 2016 was trading lower by Rs 93, or 0.37%, at Rs 25,152 per 10 grams as participants trimmed positions, largely in tune with a weak trend overseas.
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