Investing.com - Gold prices plunged to a five-year low during early Asian hours on Monday, before trimming losses as investors returned to the market to seek cheap valuations.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange hit an intraday low of $1,080.00 a troy ounce, a level not seen since February 2010, before recovering to trade at $1,115.20 during European morning hours, down $16.70, or 1.48%.
Gold's losses accelerated during early morning hours in Asia as a bout of technical selling kicked in after prices broke below a key support level close to the $1,120-level, triggering fresh sell orders amid bearish chart signals.
Comex gold prices have been under heavy selling pressure in recent weeks amid speculation the Federal Reserve is moving closer to raising interest rates for the first time in eight years.
Prices of the precious metal slumped $27.20, or 2.24%, last week, the fourth straight weekly loss, amid rising bets that a rate hike is coming in September.
Gold, which yields nothing and costs money to hold, is seen as a less attractive investment during times of rising interest rates.
Also on the Comex, silver futures for September delivery slumped 6.6 cents, or 0.44%, to trade at $14.76 a troy ounce, while copper for September delivery shed 1.3 cents, or 0.51%, to trade at $2.483 a pound.
Meanwhile, the dollar marched higher against its major counterparts as upbeat U.S. inflation and housing data on Friday added to expectations for an interest rate hike this fall.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 97.94 after hitting a seven-week high of 98.19 earlier.
A stronger dollar saps demand for raw materials as an alternative investment and makes metals priced in the currency more expensive in terms of other monies.
Greek banks were set to reopen on Monday after a forced 3-week closure but restrictions on cash withdrawals were still to remain. In a decree Saturday, the Greek government kept the daily cash withdrawal limit at €60 but added a weekly limit of €420.
On Friday, German lawmakers voted in favor of opening discussions on Greece's third bailout and the European Union decided to release a short-term loan of €7.16 billion to help Greece pay back a loan due Monday to the European Central Bank.