NEW YORK: Gold fell more than 1% on Monday as the dollar hovered near a more than one-week high, but the metal held above $1,700 an ounce, buoyed by fears of a second wave of coronavirus infections.
Spot gold fell 0.2% to $1,726.61 per ounce by 02:04 p.m. ET (1804 GMT). US gold futures settled 0.6% down at $1,727.20.
"In a risk-off mood, the dollar becomes a favorable asset and that's pressuring gold," said David Meger, director of metals trading at High Ridge Futures.
"But since the US Federal Reserve meeting, we have been crawling down because the gold market did not get more monetary stimulus from the Fed; no additional rate cuts or asset purchases."
The Fed maintained its key overnight interest rate in the target range of zero to 0.25 percent last week.
Bullion also faces deflationary pressures in the short term, said Saxo Bank analyst Ole Hansen.
"Inflation is collapsing with the drop in consumer demand and the slow reopening of economies," Hansen said. "So that's removing the demand for gold."
Speculators cut their bullish positions in COMEX gold and silver contracts in the week to June 9.
On the technical front, "there is a lot of resistance at around $1,740 and the flow of funds is not sufficient," said Bart Melek, head of commodity strategies at TD Securities.
Palladium rose 1% to $1,937.97 an ounce, platinum rose 1.6% to $818.53 per ounce, after touching a one-month low of $780.05, and silver fell 0.3% to $17.38, having earlier hit a near three-week low of $16.93.-Reuters