Gold prices dip as lofty US dollar smothers appeal

Gold eased on Monday as a towering US dollar pressured demand for greenback-priced bullion and kept it pinned near nine-month lows seen last week.

Spot gold dipped 0.3 per cent to $1,737.29 per ounce by 0742 GMT. US gold futures also fell 0.3 per cent to $1,736.40. The dollar rose about 0.4 per cent and was within touching distance of Friday's 20-year peak, keeping overseas buyers away from gold.

"While gold prices remain below $1,753/oz it seems a move down to $1,720 is on the cards. Although there is some support around $1,730 ... given the bearish trend overall, any upside is likely to be a retracement, at best," said Matt Simpson, senior market analyst at City Index.

Bullion marked a fourth straight weekly loss on Friday, having hit its lowest since late-September a few sessions prior, hurt by the dollar's ascent and bets for steep interest rate hikes gaining traction after healthy US jobs data. "Gold has had a large move lower, and there comes a point where the market needs to pause for breath. And that's what we are seeing on gold right now," Simpson said.

Atlanta Federal Reserve Bank President Raphael Bostic, until recently among the US central bank's most dovish policymakers, on Friday said he "fully" supports another three quarters of a percentage point interest rate rise at the Fed's next policy meeting later this month. Higher interest rates and bond yields increase the opportunity cost of holding non-yielding bullion. Benchmark US 10-year Treasury yields pulled back from the previous session's over one-week high, likely limiting losses in gold.

Meanwhile, shares slid on Monday as investors braced for a US inflation report that could force another super-sized hike in interest rates. Spot silver fell 0.7 per cent to $19.17 per ounce, and platinum slipped 1.6 per cent to $883.13. Palladium dropped 1.9 per cent to $2,141.83, after rising nearly 10 per cent on Friday.