By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON (Reuters) - Gold hit its lowest since February on Thursday, extending losses after its biggest monthly decline in more than three years, as a surge in oil prices boosted bond yields, denting interest in non-yielding gold as an alternative investment.
Bullion steadied later in the day as the dollar fell to new session lows. [USD/]
Spot gold was flat at $1,172.65 an ounce by 2:49 p.m. EST (1949 GMT), having reached a 10-month low of $1,160.38. U.S. gold futures for February delivery settled down 0.4 percent at $1,169.40 per ounce.
The precious metal fell more than 8 percent in November, hurt by a jump in the dollar and Treasury yields after Donald Trump's surprise election to the U.S. presidency led to speculation that his commitment to infrastructure spending would spur growth and inflation.
That pushed the dollar sharply higher, though it retreated on Thursday. [FRX/]
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"Gold has effectively gone into a downward spiral, triggered by the Trump election and the dollar strength that has come through from that," Oxford Economics analyst Daniel Smith said. "We see that dollar strength persisting over the next year, so there are a lot of reasons to think gold is going to struggle."
Yields on benchmark U.S. 10-year Treasury notes hit 16-1/2-month highs on Thursday and Germany led euro zone government bond yields higher. [GVD/EUR]
"In the near term, gold continues to look fragile, and in our view the market will likely remain under some pressure ahead of the December FOMC meeting," said Joni Teves, strategist for UBS Global Research.
The Federal Reserve is widely expected to lift interest rates for only the second time in a decade at its Dec. 13-14 meeting.
Gold-backed exchange-traded funds have seen hefty outflows. Holdings of the largest, New York-listed SPDR Gold Shares , fell nearly 60 tonnes in November, the most of any month since May 2013. [GOL/ETF]
Silver was 1 percent higher at $16.64 an ounce.
"We believe silver prices will be better bid later in 2017 (we see a price range of $16.00-$21.50/oz)," said James Steel, chief precious metals analyst for HSBC Securities in New York, in a note.
"We also base our expectations on solid fundamentals, as mine supply is likely to contract while industrial and jewellery demand should increase."
Platinum was up 0.6 percent at $916 after hitting its lowest since Feb. 5 at $893.50 earlier in the day.
Palladium was down 2.5 percent at $750.35, after tapping its highest since June 2015 at $774.60.
(Additional reporting by Apeksha Nair in Bengaluru; editing by Elaine Hardcastle)