Gold edges down as dollar steadies off 9-month high

By Jan Harvey

LONDON (Reuters) - Gold inched lower on Monday as the dollar steadied near a nine-month high, though uncertainty over the timing of a U.S. interest rate hike kept prices hemmed into a range, with traders awaiting U.S. data for further direction.

Signs of improving physical demand in major Asian consumers helped underpin the metal after it snapped three weeks of losses last week to rise 1.3 percent, analysts said.

Spot gold was at $1,264.43 an ounce at 1128 GMT, down 0.1 percent, while U.S. gold futures for December delivery were down $2.70 an ounce at $1,265.00.

"Over the last three weeks we've had very much a rangebound environment," Mitsubishi analyst Jonathan Butler said. "The strength of the dollar, which is a negative factor for gold, is in large part responsible for that. On the other side, physical demand in Asia has at least given some price support."

"We have the November Fed meeting on the horizon, and the U.S. election - those are the two big macro events," Butler added. "But with a Democratic election victory, and no move on rates in November, nothing really changes for gold."

The Fed is tipped to hike rates in December. Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

The U.S. currency rallied to a near nine-month high against a currency basket in early trade, boosted by expectations the Fed will raise rates this year and a receding chance of Donald Trump becoming U.S. president.

Third-quarter growth figures from the United States and Fed policymakers speeches due this week will be closely watched for clues on a possible interest rate hike.

Investment interest in gold showed signs of softening last week. U.S. Commodity Futures Trading Commission data showed on Friday that hedge funds and money managers cut their net long positions in COMEX gold for a third week in the week to Oct. 18.

The world's largest gold-backed exchange-traded fund, SPDR Gold Shares, reported its biggest one-day outflow since April 2013 on Friday, of 16.6 tonnes.

"It will be important to watch ETF flows tonight following Friday's reduction," MKS said in a note.

Silver was up 0.8 percent at $17.62 an ounce, while platinum was 0.8 percent higher at $937.31 an ounce, having touched its lowest since Feb. 29 at $921.20 in the previous session.

Palladium, which hit a more than three-month low of $613.10 in the previous session, was up 0.3 percent at $625.95.

(Additional reporting by Apeksha Nair and Nallur Sethuraman in Bengaluru; Editing by David Holmes and Susan Thomas)