Gold falls 1 % to hit near six-week low

Bengaluru: Gold prices fell one percent to hit their lowest in near six weeks on Monday, amid a stronger dollar and rise in Asian shares, ahead of a flurry of U.S. data due this week. 

"This sharp depreciation, which lacks any fundamental drivers on a relatively quiet trading day has left investors bewildered," said Lukman Otunuga, research analyst, FXTM. 

"With the fundamentals out of the picture, price action may be the key culprit behind the decline," he added. 

Spot gold was down 1.2 percent at $1,241.89 per ounce, as of 0912 GMT, touching its lowest since May 17.

U.S. gold futures for August delivery slipped 1.1 percent to $1,243.10 per ounce.

"The market remains clueless about this trigger. The sweep went through CME, 18,500 lots gold and 5,500 lots silver," said Afshin Nabavi, head of trading at MKS in Switzerland. 

"A few Centre in the Middle East and Far East are closed for the Eid festivities, so the market is thin." 

Investors are settling into a cautious mode while they await the U.S. data, including June consumer confidence, pending home sales, crude oil inventories and revised first-quarter GDP for signs of softness that could push back rate hike expectations.

"There`s certainly some expectations of disappointing data and also a more dovish Fed, that could keep gold prices elevated," ANZ analyst Daniel Hynes said. "Anything on the inflation front will be constantly watched." 

Shares rose in Europe on Monday, with Italian banks gaining after a deal to wind up two failed regional lenders, while the dollar and U.S. bond yields held close to recent lows as subdued inflation raised questions over the outlook for monetary policy. 

"I think there`s a chance for a potential delay in rate hikes, which would support gold prices further," Hynes said.

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. 

Holdings in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, dipped 0.35 percent to 851.02 tonnes on Friday. 

Hedge funds and money managers slashed their net long position in COMEX gold for the second straight week in the week to June 20, and cut it slightly in silver, U.S. Commodity Futures Trading Commission data showed on Friday.

Among other precious metals, silver dropped as much as 1.4 percent to $16.46 per ounce. Platinum slipped up to 0.6 percent to $920.40 per ounce. 

Palladium gained 0.3 percent to $854.25 per ounce. In the previous session, it registered its biggest intraday percentage decline since Jan. 25.