NEW YORK (Reuters) - Gold fell to its lowest in more than three weeks on Monday, breaking through key psychological support at $1,100 an ounce as flight-to-quality demand faded with better risk appetite.
Investors are also nervous that a surprise 25-basis-point rate hike in major bullion consumer India could herald global monetary tightening, which would raise the opportunity cost of holding noninterest-bearing gold.
Standard Chartered analyst Daniel Smith said a range of issues was curbing demand for gold.
“As we saw these renewed worries about Greece coming to the fore, and the hike in Indian rates, it made people a bit concerned about the outlook (for gold),” he said.
Spot gold hit a low of $1,092.25 an ounce, the weakest since February 25. It was at $1,099.65 an ounce at 3:24 p.m. EDT, against $1,106.55 late in New York on Friday.
U.S. April gold futures on the COMEX division of the NYMEX settled down $8.10 at $1,099.50 an ounce.
On Friday, spot bullion’s 1.7 percent decline was the biggest one-day percentage loss since February 4, when it had lost 4.2 percent.
The precious metal ended last week nearly unchanged. It had risen earlier in the week in the face of a rising dollar, boosted by safe-haven buying due to fiscal worries about Greece and uncertainty about currencies.
But bullion retreated on Friday as the dollar surged against the euro as India’s interest rate hike created economic uncertainty about a country whose gold consumption leads the world.
Follow-through selling dragged gold market lower as the metal remained weaker even as both the euro and oil turned higher on broad gains in the equities markets.
New development about a rescue plan for debt-laden Greece failed to lift gold.
European leaders sent out conflicting signals at the weekend over aid to Greece, with Germany’s Angela Merkel urging Athens to solve its debt problems alone and Italy’s Silvio Berlusconi strongly backing EU support.
“There is still plenty of confusion about a bailout for Greece,” Credit Agricole said in a note. “Merkel dampened expectations of a bailout by stating that it was not even on the agenda for the summit.”
Among other precious metals, silver was at $16.91 an ounce against $16.93, platinum was at $1,596 an ounce against $1,604.50, while palladium was the biggest decliner, slipping to $456.50 against $467.
Both platinum and palladium are consolidating after posting hefty gains at the beginning of the month after car sales data from the key U.S. and Chinese markets cheered investors. The metals are primarily used in autocatalysts.
Additional reporting Jan Harvey in London; Editing by Lisa Shumaker