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

Tuesday, 1 December 2015 00:16 - - {{hitsCtrl.values.hits}}

LONDON, Nov 30 (Reuters) - Gold steadied on Monday but remained close to its lowest level in nearly six years as the dollar hit a multi-month high 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.

Spot gold was up 0.4% at $1,061.91 an ounce by 1434 GMT, just above Friday’s trough at $1,052.46, the lowest since February 2010.

The dollar was at an eight-month high against a basket of major currencies, making gold more expensive for holders of other currencies.

Bullion has lost 7% 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.

Gold, a non-interest-paying asset, could take a hit from higher rates as the dollar gains and the opportunity cost of holding the precious metal increases.

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.