* Gold posted biggest weekly gain since October last week
* Investors await Dec. 16-17 Fed meeting (Adds milestone to paragraph 1, updates prices; adds comment, second byline, NEW YORK dateline)
By Marcy Nicholson and Clara Denina
NEW YORK/LONDON, Dec 15 (Reuters) - Gold fell more than 2 percent to one-week lows on Monday for its weakest session so far this year after a late sell-off triggered by oil’s continued rout and a stronger dollar ahead of the key Federal Reserve meeting later in the week.
Bullion prices had weakened in early trade as the dollar firmed before the Fed meeting on Tuesday and Wednesday, which could provide clues on the timing of a possible interest rate rise by the U.S. central bank.
In afternoon trade, selling accelerated as the market took its cue from collapsing U.S. crude oil before technical selling kicked in as bullion took out near- and medium-term moving averages on its way from $1,210 to the low for the day of $1,191.
“Gold was a victim to the fall in crude,” said Tai Wong, director, metals trading at BMO Capital Markets in New York.
The drop was conspicuous for its size and speed amid low volumes: Prices fell nearly 2 percent within three hours, erasing all of last week’s gains.
Spot gold fell to a session low of $1,190.59 an ounce, and was down 2.4 percent at $1,193.26 by 4:29 p.m. EST (2127 GMT).
Bullion climbed 2.6 percent last week, its largest such increase since October, but investors were cashing in after gold failed to breach key resistance convincingly at $1,235.
U.S. gold futures for February delivery slipped 1.2 percent to settle at $1,207.70 an ounce.
A sooner-than-expected rise in interest rates could boost the dollar and hurt non-interest-bearing bullion. The dollar rose 0.1 percent against a basket of currencies, boosted by positive U.S. economic data.
Many investors believe the Fed may change its promise to keep interest rates near zero for a considerable time.
Also bearish was the ruble’s fall to a new low, raising concerns that this may trigger gold sales in Russia, traders said.
Data on Friday showed that hedge funds and money managers raised their net long positions in gold and silver futures and options to their highest in four months in the week to Dec. 9, exposing how bullish the market became without any change in fundamentals.
Silver fell 5.1 percent for its worst day this year to $16.12 an ounce, on technical selling after falling below its 50-day moving average at $16.56.
Platinum dropped 1.5 percent to $1,206.25 an ounce. Palladium slipped 1.9 percent to $794 an ounce. (Additional reporting by Manolo Serapio Jr. in Singapore and Josephine Mason in New York.; Editing by Michael Urquhart and Jonathan Oatis)