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PRECIOUS-Gold heads for biggest monthly fall in 2-1/2 years

Published 01/12/2015, 07:05 am
© Reuters.  PRECIOUS-Gold heads for biggest monthly fall in 2-1/2 years
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* Gold near lowest since Feb 2010 near-six-year low

* Bullion down 7 percent in November

* Palladium down 19 pct, platinum 16 pct in November (Updates prices; adds comment, second byline, NEW YORK dateline)

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, Nov 30 (Reuters) - Gold rose 1 percent on Monday but remained close to its lowest level in almost six years and was on track for its steepest monthly slide in 2-1/2 years on prospects of a U.S. interest rate rise this year as the dollar hit a multi-month high.

Spot gold XAU= was up 0.9 percent at $1,066.40 an ounce at 2:57 p.m. ET (1957 GMT), just above Friday's trough at $1,052.46, the lowest since February 2010.

"We've got the payroll (data) this Friday and you don't want to be short ahead of that," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago, noting that some support also came from the weak U.S. stock markets.

The dollar .DXY was at an 8-1/2-month high against a basket of major currencies, making gold more expensive for holders of other currencies, typically a source of pressure.

Bullion has lost nearly 7 percent of its value in November, its biggest monthly fall since June 2013, as investors remained focused on a possibly imminent rate hike in the United States.

The U.S. Federal Reserve holds its next policy meeting on Dec. 15-16.

"Gold's negative correlation with the dollar is likely to continue because of the expectations of the U.S. interest rates," ETF Securities Martin Arnold said.

"We expect the dollar to peak early next year and then decline as the market gets on board with the pace of the Fed tightening cycle."

A U.S. payrolls report on Friday will be even more closely watched than usual. A strong number, after a surge in job growth in October, could cement expectations that the Fed will deliver its first hike in almost a decade.

"A number close to the 200,000 mark will be sufficient to confirm in the Fed's mind that the time is right to act," ICBC Standard Bank analyst Tom Kendall said.

The European Central Bank policy meeting on Thursday will also be eyed for impact on the currency markets. The ECB is widely expected to ease policy. urn:newsml:reuters.com:*:nL8N13M30L

Investors are pulling money out of bullion funds, exacerbating the sell-off in gold.

Assets in SPDR Gold Trust GLD , the world's top gold-backed exchange-traded fund, fell to their lowest since September 2008 on Friday. GOL/ETF

Platinum XPT= has lost 16 percent in November and fell 1.6 percent to a seven-year low at $820.60 per ounce on Monday.

Silver XAG= was up 0.2 percent at $14.07 but was set for a 9.5 percent monthly loss.

Palladium XPD= has lost 19 percent for the month. For the session, it was down 1.1 percent at $541.75 an ounce.

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