BENGALURU: Gold fell to a near three-week low on Wednesday as the dollar scaled a 16-month peak and a stock market rebound stirred renewed appetite for riskier investments.
However, the metal stayed on track for its best month since January, with a 1.7 percent gain in October. That would end a six-month decline driven by stock market volatility, the longest losing streak since the period from August 1996 to January 1997.
Spot gold was down 0.8 percent at $1,213 per ounce at 13:34 p.m EDT (1734 GMT), having touched its lowest since Oct. 11 at $1,211.52. US gold futures settled down $10.30, or 0.8 percent, at $1,215.
"Gold has struggled to benefit as a safe haven asset," said Suki Cooper, precious metals analyst at Standard Chartered Bank. "In the near term, gold is very much driven by the risk environment, the equity market performance and the strength of the dollar."
The dollar index climbed to its highest level in 16 months while stock markets bounced after a brutal October.
The bullion also fell below the 100-day moving average at around $1,210. A break below the key technical indicator could drive some investors away from gold, analysts said.
"Gold has slipped for three straight days as the dollar index breaches key resistance and bullion now sits just above the key support $1,210-$1,215 from where we broke out earlier this month," said Tai Wong, head of precious and base metals trading at BMO.
"A break below $1,210 will take gold back into the dreary old range."
Analysts said gold investors will be closely watching the US congressional elections on Nov. 6, which will determine whether the Republican or Democratic party controls the US Congress.
"If there are signs that the Republicans are going to do well, this will probably lead to yet more dollar strength,"
said Alasdair Macleod, head of research at GoldMoney.com.
Gold has fallen about 11 percent since April, hit by rising US interest rates and a global trade war that threatens economic growth, prompting investors to rush to the safety of the dollar, making bullion more expensive for holders of other currencies.
Rising US interest rates hurt dollar-priced gold as they raise the opportunity cost of holding the bullion.
In other precious metals, silver fell 1.2 percent to $14.3 per ounce, having slipped as low as $14.2, matching a low last touched on Oct. 10.
Platinum was up 0.6 percent at $837.60 while palladium rose nearly 0.7 percent to $1,080.47.
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