Gold poised for worst monthly dip in 2-1/2 years

Gold was trading close to its lowest level in nearly 6 years and was poised to record its worst monthly slide in 2-1/2 years on prospects of a US interest rate hike

Gold was trading close to its lowest level in nearly six years on Monday and was poised to record its worst monthly slide in 2-1/2 years on prospects of a US interest rate hike this year.

Spot gold was little changed at $1,057 an ounce by 0028 GMT, after dropping 1.2% in the previous trading session. The metal was within striking distance of $1,052.46, the lowest since February 2010, reached on Friday.

Bullion has lost about 7.5% of its value in November, its steepest monthly fall since June 2013.

The precious metal has fallen out of favour as investors position themselves for the first US rate hike in nearly a decade. The Federal Reserve is expected to raise rates at its next policy meeting in December.

Investors believe gold, as a non-interest-paying asset, will take a hit to demand from higher rates as the dollar gains.

The greenback is already trading near an eight-month high, and further strength could hurt dollar-denominated gold.

Assets in SPDR Gold Trust, the world's top gold-backed exchange-traded fund, fell 0.14% to 654.80 tonnes on Friday, the lowest since September 2008.

For trading cues this week, bullion traders would be focussed on the US nonfarm payrolls report due on Friday. A strong jobs report could seal the case for a rate hike at the Fed's December 15-16 meeting.

The European Central Bank policy meeting on Thursday will also be eyed for impact on the currency markets. The ECB is widely expected to ease policy.

Elsewhere, gold miners in Australia, emboldened by a weakening currency, have been increasing production in the face of a global rout in the precious metal, figures released on Sunday showed.

MARKET NEWS

* Currency markets got off to a nondescript start on Monday thanks to an uneventful weekend, but the prospect of further policy easing this week by the European Central Bank is likely to keep the euro on the defensive.