Gold extends losing streak; near 2-week low on strong dollar

SINGAPORE (Reuters) - Gold extended losses to a fifth session on Thursday to trade near a two-week low after the U.S. dollar strengthened on indications from the U.S. Federal Reserve that it could raise interest rates sooner than expected.

FUNDAMENTALS

Spot gold fell 0.2 percent to $1,289.66 an ounce by 0020 GMT, after hitting a two-week low of $1,287.83 in the previous session. U.S. gold was down about $4 to $1,290.80.

A surprisingly strong jobs market recovery could lead the Fed to raise interest rates earlier than it had been anticipating, according to the minutes from the central bank's July 29-30 meeting, though most officials wanted further evidence before changing their view.

Higher interest rates would dull the appeal of non-interest bearing assets such as gold.

Ultra-calm trading conditions in gold are becoming self-perpetuating as a persistent lack of volatility frustrates investors seeking a return, pushing them further away from a market that analysts say could be becalmed for years.

Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.9 tonnes to 800.09 tonnes on Wednesday - a third straight day of increase.

Mounting violence in Ukraine and the Middle East is prompting investors to seek safety in gold.

Russia's gold reserves rose to 35.5 million troy ounces in July from 35.2 million troy ounces in June, the central bank said on its website on Wednesday.

MARKET NEWS

The U.S. dollar traded at 11-month highs against a basket of major currencies on the slightly hawkish tone from the U.S. central bank.

(Reporting by A. Ananthalakshmi; Editing by Richard Pullin)