PRECIOUS-Gold slips to over 1-week low as Fed policy clouds outlook

By Kavya Guduru

Nov 21 (Reuters)Gold prices fell for a fourth consecutive month on Monday on a stronger dollar, with the Federal Reserve’s monetary policy stance clouding the prospects for non-yielding bullion.

find gold XAU= fell 0.6% to $1,739.31 an ounce as of 09:31 GMT after previously hitting its lowest level since November 10 at $1,738.35.

US Gold Futures GCv1 lost 0.7% to $1,742.00.

A key driver of gold prices are U.S. real interest rates, and the metal is taking hints of higher nominal rates as well as a stronger dollar, said UBS analyst Giovanni Staunovo.

Gold bars fell 1.2% last week, the worst reading since ending Oct. 14.

The dollar .DXY rose 0.8%, making bullion more expensive for foreign buyers. USD/

“With likely continued outflows from gold ETFs, fueled by more US rate hikes, we expect gold to fall to $1,600/oz by the end of the year,” Staunovo said. GOL/ETF

Investors will be watching the minutes of Wednesday’s November Federal Reserve meeting closely, with market participants pricing in a half-point rate hike in December last comments by Fed officials. FEDWACH

Gold could test the $1,735 and $1,729 support levels ahead of the minute, said Matt Simpson, an analyst at City Index.

Higher interest rates reduce the attractiveness of gold, which has traditionally been a hedge against inflation, by increasing the opportunity cost of holding non-interest-bearing bullion.

Investors are also keeping an eye on the economic fallout from the new COVID-19 restrictions on key precious metals consumers China.

Chinese physical gold rewards fell sharply last week as buying slowed.

spot silver XAG= fell 1.3% to $20.63 an ounce of platinum XPT= down 1.3% to $964.00 and palladium XPD= fell 2.5% to $1,888.12.

(Reporting by Kavya Guduru and Arpan Varghese in Bengaluru Editing by Mark Potter)

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