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Gold extended loses to a third straight session on Monday, as strong data on US consumer sentiment prompted investors to pare bets the Federal Reserve will wait until next year to raise interest rates.
Spot gold fell 0.5 per cent to $1,171.58 an ounce by 0346 GMT, while US gold futures slid nearly 1 per cent. Other precious metals also tracked gold lower.
Bullion has come under pressure after strong US economic reports towards the end of last week.
Data on Friday showed US consumer sentiment rebounded strongly in early October, while Thursday data showed a pick-up in core inflation.
The upbeat data helped the dollar move away from seven-week lows as it kept alive prospects that the Fed could hike interest rates before year-end.
“Gold is tracking the dollar at the moment,’’ said a trader in Hong Kong.
“After last week's data, some have put a December rate hike back on the table.’’
Before the drop on Friday, gold had rallied to a 3-1/2-month high of $1,190.63 last week as traders believed the Fed could be forced to delay a rate hike due to sluggishness in the US economy amid a slack in the global economy.
Uncertainty over the timing remains as other data on Friday showed a drop in US industrial output.
On Monday, China posted its weakest quarterly economic growth since the global financial crisis, raising pressure on policymakers to cut interest rates further and roll out other support measures to avert a sharper slowdown.
Investor sentiment towards gold was mixed. Hedge funds and money managers raised their bullish bets in COMEX gold and silver to near five-month highs in the week ended October 13, U.S. Commodity Futures Trading Commission data had showed on Friday.
Other data, however, showed a dip in assets of SPDR Gold Trust, the top gold-backed exchange-traded fund, by 0.89 percent to 693.75 tonnes on Friday, the first slide in nearly two weeks.
Gold could see more losses in the near term, as it dipped below the 200-day moving average of $1,175 on Monday.
“Key levels of support (are built) around $1,170-$1,175, with a move below here opening up $1,150,’’ said MKS Group trader Sam Laughlin.
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