Gold hit its lowest since February on Thursday, extending losses after its biggest monthly decline in more than three years, as a surge in oil prices boosted bond yields, denting interest in non-yielding gold as an alternative investment. Bullion steadied later in the day as the dollar fell to new session lows.
Spot gold was flat at $1,172.65 an ounce by 2:49 pm EST (1949 GMT), having reached a 10-month low of $1,160.38. US gold futures for February delivery settled down 0.4 percent at $1,169.40 per ounce. The precious metal fell more than 8 percent in November, hurt by a jump in the dollar and Treasury yields after Donald Trump's surprise election to the US presidency led to speculation that his commitment to infrastructure spending would spur growth and inflation.
That pushed the dollar sharply higher, though it retreated on Thursday. "Gold has effectively gone into a downward spiral, triggered by the Trump election and the dollar strength that has come through from that," Oxford Economics analyst Daniel Smith said. "We see that dollar strength persisting over the next year, so there are a lot of reasons to think gold is going to struggle." Yields on benchmark US 10-year Treasury notes hit 16-1/2-month highs on Thursday and Germany led euro zone government bond yields higher.
The Federal Reserve is widely expected to lift interest rates for only the second time in a decade at its December 13-14 meeting.
Gold-backed exchange-traded funds have seen hefty outflows. Holdings of the largest, New York-listed SPDR Gold Shares, fell nearly 60 tonnes in November, the most of any month since May 2013. Silver was 1 percent higher at $16.64 an ounce. Platinum was up 0.6 percent at $916 after hitting its lowest since February 5 at $893.50 earlier in the day. Palladium was down 2.5 percent at $750.35, after tapping its highest since June 2015 at $774.60.