SINGAPORE, Dec 14 (Reuters) - Gold started off a crucial week on the back foot on Monday, as the Federal Reserve is expected to raise U.S. interest rates for the first time in nearly a decade.
FUNDAMENTALS
* Spot gold XAU= fell 0.2 percent to $1,072.11 an ounce by 0042 GMT, after gaining 0.3 percent on Friday.
* In its last policy meeting of the year on Dec. 15-16, the Fed is widely expected to hike U.S. rates for the first time since June 2006 on the back of a robust economy. urn:newsml:reuters.com:*:nL8N13Z20I
* The U.S. central bank is expected to raise rates by a quarter of a percentage point on Wednesday.
* Higher rates are expected to hurt demand for non-interest-paying bullion, while boosting the dollar.
* Gold has already slid 9 percent for the year, its third straight annual decline, in anticipation of higher rates.
* However, analysts are forecasting further declines in the next few months.
* BofA Merrill Lynch said on Friday it expected the gold price to drop to $950 early in 2016 due to the upcoming U.S. rate hike.
* Data last week showed options traders are boosting their bets that gold will soon drop to $1,000 an ounce. urn:newsml:reuters.com:*:nL3N13X2BO
* Speculators' short positions in gold are near record highs. Hedge funds and money managers' reduced their bearish stance in COMEX gold in the week to Dec. 8 as prices rallied modestly, U.S. Commodity Futures Trading Commission data showed on Friday, but were still not too far from the prior week's record high. urn:newsml:reuters.com:*:nL1N14022B
* In the physical markets, a bullion association in India has tied up with BSE Ltd, the country's oldest stock exchange, to launch the nation's first physical gold trading exchange. urn:newsml:reuters.com:*:nL3N1404JM
* For the top stories on metals and other news, click TOP/MTL or GOL
MARKET NEWS
* The dollar, euro and yen got off to a sedate start on Monday following a relatively uneventful weekend, but encouraging Chinese data put a small spring in the Aussie's step. USD/
* Asian stocks slipped on Monday after Wall Street sank amid plunging crude oil prices. MKTS/GLOB
DATA AHEAD (GMT)
1000 Euro zone Industrial production Oct
PRICES AT 0042 GMT Metal
Last
Change Pct chg
Spot gold
1072.11
-1.95
-0.18 Spot silver
13.92
0.02
0.14 Spot platinum
840.03
-0.15
-0.02 Spot palladium
541.67
-0.56
-0.1 Comex gold
1071.9
-3.8
-0.35 Comex silver
13.915
0.031
0.22
COMEX gold and silver contracts show the most active months