Investing.com - Gold prices fell more than 1% on Monday as strength in equity markets hit safe haven demand for the precious metal and as expectations for a U.S. rate hike this month continued to weigh.
Gold was down 1.44% to $1,158.5 a troy ounce by 10:24 ET, a level not seen since February 5.
Gold initially gained after Italian voters rejected a referendum on constitutional changes backed by the government, prompting Prime Minister Matteo Renzi to step down and sending the euro to 20-month lows.
But European stock markets and the single currency rebounded as the referendum outcome had been largely priced in by markets.
Investors were also reassured after the European Central Bank said last week that it was prepared to temporarily step up purchases of Italian government bonds should the referendum results drive up borrowing costs.
Stronger risk appetite curbs the appeal of traditional safe-haven assets, such as gold.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.28% to 101.47, pressured lower by the stronger euro.
But demand for the dollar continued to be underpinned after a solid U.S. jobs report on Friday cemented expectations for a rate hike by the Federal Reserve at its meeting next week.
A report from the Institute of Supply Management on Monday showed that guage of non-manufacturing activity hit a one-year high in November, adding to optimism over the economic outlook.
According to Investing.com's Fed Rate Monitor Tool, 100% of traders expect the Fed to raise interest rates next week.
The precious metal fell almost 8% in November on the back of expectations that increased U.S. fiscal spending under a Trump administration will spur economic growth and inflation, which would ultimately lead to an era of higher interest rates.
Expectations of tighter monetary policy tend to weigh on gold, which struggles to compete with yield-bearing assets when borrowing costs rise.
Elsewhere in metals trading, silver for March delivery was down 1% at $16.66 a troy ounce, while copper for March delivery traded at $2.7 a pound.