November 2, 2015 / 4:01 AM / in 2 years

PRECIOUS-Gold dips to 4-week low on U.S. rate hike fears

* Gold falls to 4-week trough of $1,134.60/oz
    * Physical demand, investor flows weak
    * Drop in dollar, stocks fail to lift bullion

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Nov 2 (Reuters) - Gold fell to its lowest level
in four weeks on Monday, extending a sell-off into a fourth
straight session as investors feared the Federal Reserve would
hike U.S. interest rates this year.
    The technical picture for gold has deteriorated, with
traders warning of further price drops. Physical demand and
investor flows have also not supported the metal. 
    Spot gold fell to $1,134.60 an ounce, its lowest
since Oct. 5, early on Monday before recovering to trade at
$1,141.50 by 0642 GMT.
    Gold had rallied last month on speculation that the softness
in the global economy could prompt the Fed to delay the rate
hike to next year. But the U.S. central bank's hawkish tone last
week triggered a sell-off in bullion.
    Technical selling and liquidation of long positions were
sending prices lower, according to HSBC analyst James Steel.
    "Gold probably needs moderately better emerging market
import demand if it is to sustain a rally. In the near term, the
market also needs a respite from investor liquidations if prices
are to stabilise," Steel said.
    Asian gold demand saw some uptick towards the end of last
week, as lower prices attracted buyers. But local premiums
remained largely unmoved, a sign that demand has not picked up
in a significant way, dealers said. 
    Demand outside of Asia also remained soft. U.S. Mint
American Eagle gold coin sales slumped 73 percent in October.
 
    Investors were seen reducing their gold exposure. Assets in
SPDR Gold Trust, the top gold-backed exchange-traded fund, fell
0.3 percent to 692.26 tonnes on Friday. 
    Speculators trimmed a bullish bet in gold from an
8-1/2-month high in the week ended Oct. 27, while they boosted a
net long stance in silver to the highest level on record.
 
    Traders have been selling gold since the Fed on Wednesday
surprised with a direct reference to its next policy meeting as
a possibility for the first U.S. rate hike in nearly a decade.
 
    The metal had posted its worst weekly drop in nine weeks on
Friday. 
    Rising interest rates tend to weigh on gold because they
lift the opportunity cost of holding non-yielding bullion.
    Gold failed to see safe-haven bids on Monday despite
weakness in the dollar and equities. Asian stocks slid after
soft Chinese factory surveys stoked global growth concerns,
while the dollar slipped. 
    Gold is expected to test support at $1,131, a break below
which could cause a loss towards the next support at $1,119,
said Reuters technicals analyst Wang Tao. 
    
    PRICES AT 0642 GMT  
 Metal             Last     Change   Pct chg
                                            
 Spot gold          1141.5     -0.5    -0.04
 Spot silver         15.46    -0.06    -0.39
 Spot platinum         971   -10.74    -1.09
 Spot palladium      667.3     -6.2    -0.92
 Comex gold         1141.5      0.1     0.01
 Comex silver         15.5   -0.067    -0.43
                                            
 COMEX gold and silver contracts show the
 most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Joseph Radford and
Anand Basu)
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