PRECIOUS-Gold falls to 1-month low as dollar soars
* Specs trim net short positions in gold in week to Nov. 6
* Dollar index hits over 16-month peak
* GRAPHIC-2018 asset returns: (Updates prices)By Sumita LayekNov 12 (Reuters) - Gold fell for a seventh straight sessionon Monday, hitting its lowest in a month as the dollar jumped to16-month highs on the back of political uncertainty in Europeand the U.S. Federal Reserve's hawkish stance on interest rates.Spot gold fell 0.3 percent to $1,206.22 per ounce at1254 GMT, having touched a one-month low of $1,203.36 earlier inthe session. U.S. gold futures edged 0.1 percent lower to$1,207.9 per ounce.
"The main driver has been some renewed dollarstrengthening... due to political uncertainty in UK and Italy,"said Saxo Bank analyst Ole Hansen. "Gold is facing a bit of anuphill struggle due to the dollar strength."
The metal posted its biggest weekly drop since August lastweek after the Fed reaffirmed its monetary tightening stance,seen as a negative for non-yielding bullion.The dollar index , which measures the greenbackagainst a basket of six major currencies, was up 0.5 percent onMonday. The currency benefited from a broader move away from riskierassets due to U.S.-Sino trade tensions, China's economicslowdown, Brexit uncertainty, and the standoff between Rome andthe European Union over Italy's budget plan.
It was also underpinned by the Fed's hawkish stance oninterest rates.
The U.S. central bank last week indicated it planned toraise rates next month and remained on track for two morepotential hikes by mid-2019 on the back of an upbeat economy andrising wage pressures. Higher U.S. rates tend to boost the dollar and Treasuryyields, adding pressure on greenback-denominated, non-yieldingbullion.
"It seems like the bears are back in control," a HongKong-based trader said. "It's disappointing that every time goldstarts to rally, it runs out of steam so fast."The precious metal has fallen more than 11 percent from itsApril peak, with investors piling into the dollar as theU.S.-China trade war unfolded against a background of higherU.S. interest rates.Macquarie commodity strategist Matthew Turner said heexpects gold to fall below $1,200 by the end of the year.Meanwhile, hedge funds and money managers cut their netshort position in gold by 8,136 contracts to 37,486 contracts inthe week to Nov. 6, data showed on Friday. In other precious metals, silver was flat at $14.15per ounce, having touched its lowest since Sept. 18 at $14.06 inthe previous session.Palladium dipped 1 percent to $1,104.97 per ounce,while platinum rose 0.5 percent at $852.80 an ounce. (Reporting by Sumita Layek and Eileen Soreng in Bengaluru;Editing by Jan Harvey)
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