Gold edges down to 10-month low as dollar rises on Fed hike bets

REUTERS - Gold prices edged lower in Asian trade on Monday, reaching a new 10-month low as the dollar strengthened on expectations of a U.S. rate hike this week.

FUNDAMENTALS

* Spot gold hit its lowest since Feb. 5 at $1,153.93 an ounce and was down 0.3 percent at $1,154.54 an ounce by 0058 GMT. It fell about 1 percent on Friday.

* U.S. gold futures were also at 10-month lows, shedding half a percent at $1,156.30 per ounce.

* The dollar inched higher on Monday ahead of the U.S. Federal Reserve's meeting that was expected to deliver an interest rate hike as well as clues to future monetary policy.

* The Fed is widely expected to hike interest rates for the first time in 2016 at a two-day meeting that begins on Tuesday. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

* A preliminary survey from the University of Michigan showed on Friday that the U.S. consumer sentiment index at its highest since January 2015.

* U.S. wholesale inventories fell in October amid a surge in sales, supporting views that inventory investment would help economic growth in the fourth quarter.

* Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.38 percent to 857.45 tonnes on Friday.

* Hedge funds and money managers trimmed their net long positions in gold and silver for the fourth in a row, U.S. Commodity Futures Trading Commission data showed on Friday. In gold, they cut their net long position by 22,578 lots to 80,814.

* Global bond funds and gold extended their run of redemptions over the past week amid an "exodus from yield winners", Bank of America Merrill Lynch (BAML) said on Friday, while energy stocks saw the biggest inflow in a year.

* South Africa's Sibanye Gold took a major step outside its home market on Friday with a $2.2 billion deal to buy Stillwater Mining, the only U.S. miner of platinum and palladium.

* Gold premiums in China held near three-year highs this week amid fears of limited supply of the precious metal, while demand in India remained subdued despite lower prices due to a severe cash crunch.

(Reporting by Swati Verma in Bengaluru; Editing by Joseph Radford)