Gold fell 1.1 percent to its lowest in more than three months on Wednesday and looked set for an eighth straight losing session as a robust dollar and expectations of higher US rates curbed appetite for the metal. Spot gold reached its lowest since December 1 at $1,147.10 an ounce in earlier trade and was down 1 percent at $1,149.76 an ounce by 1525 GMT.
US gold for April delivery was down $10.90 at $1,149.20 an ounce. Stronger than expected US non-farm payroll data on Friday renewed expectations the US Federal Reserve would begin to increase interest rates in June. Higher rates could dent demand for assets that do not pay interest, such as gold, and boost the dollar, which was trading at its highest in more than 11 years against a basket of major currencies. The dollar was boosted by firmer US Treasury yields.
"Ultimately support is at $1,130, which is around last year's lows, but it's hard to argue against the short-term downtrend established since the end of January," Mitsubishi Corp strategist Jonathan Butler said. "What's happening now is the pricing in of a mid-to-late-year rate hike. It's hard to see, apart from physical demand re-emerging, any major upside catalyst."
A strong US currency makes dollar-denominated assets such as gold more expensive for holders of other currencies. The metal was also under pressure from firmer European and US shares, which bounced back from the previous session's sell-off. The drop in gold to multi-month lows has attracted some bargain hunters in Asia, the top bullion-consuming region, traders said.
In China, the metal was traded at a premium of about $5 an ounce to the London global benchmark, an indication of good buying interest. Sustained physical buying could provide a floor for falling prices. Weakness in gold spread to other precious metals, with platinum taking the biggest hit. Prices slumped to their lowest since July 2009 at $1,109.50 an ounce. Silver fell 2.2 percent to a three-month low of $15.26 an ounce and palladium was down 0.9 percent at $793.80 an ounce.
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