Gold nears biggest monthly fall in 30 months

Gold steadied on Monday but remained close to its lowest level in nearly six years as the dollar hit a multi-month high and was on track for its steepest monthly slide in two and a half years on prospects of a US interest rate rise this year.

Spot gold was up 0.4 per cent at $1,061.91 an ounce by 1434 GMT, only above Friday's trough at $1,052.46, the lowest since February 2010. The dollar was at an eight-month high against a basket of major currencies, making gold more expensive for holders of other currencies.

Bullion has lost seven per cent of its value in November, its biggest monthly fall since June 2013, as investors remained focused on a possibly imminent rate hike in the United States. Gold, a non-interest-paying asset, could take a hit from higher rates as the dollar gains and the opportunity cost of holding the precious metal increases. The US Federal Reserve holds its next policy meeting on December 15-16.

"Gold's negative correlation with the dollar is likely to continue because of the expectations of the US interest rates," ETF Securities Martin Arnold said. "We expect the dollar to peak early next year and then decline as the market gets on board with the pace of the Fed tightening cycle."