Gold hits 4-week low on firm dollar

Gold hit four-week lows on Monday as the dollar held firm and the market waited for comments from a top Federal Reserve official on US monetary policy, but prices were supported by the start of talks on the terms of Britain’s departure from the European Union.

Spot gold was down 0.2 per cent at $1,251 an ounce by 0852 GMT, up from an earlier $1,248.63, its lowest since May 24.

US gold futures fell 0.3 per cent to $1,252.5.

New York Fed President William Dudley is due to take part in a roundtable with local business leaders later on Monday.

Dudley’s comments, if hawkish, could reinforce the dollar’s uptrend, which when it rises makes dollar-denominated commodities more expensive for holders of other currencies, potentially weakening demand.

“The dollar is a large part of what's going on with gold,” said ING commodities strategist Warren Patterson. “I do see some support from uncertainty about the UK government and the start of Brexit negotiations.” British Prime Minister Theresa May failing to win a parliamentary election earlier this month has, alongside Brexit negotiations starting on Monday in Brussels, fuelled political uncertainty.

Weighing on gold is a drop in holdings of physically-backed exchange traded funds to 55.231 million ounces from 55.654 million ounces last Wednesday.