SINGAPORE (Reuters) - Gold hovered near its lowest in three months on Tuesday after sharp overnight losses as the dollar traded at 14-month highs against a basket of major currencies, dimming the metal's appeal as a currency hedge.
FUNDAMENTALS
Spot gold was little changed at $1,255.20 an ounce by 0028 GMT. The metal closed down 1 percent on Monday, after earlier hitting $1,251.24 - its lowest since June.
The dollar was boosted after a Federal Reserve study on interest rates and as the sterling was pressured amid ongoing jitters that Scotland could vote to secede from the United Kingdom.
A research from the San Francisco Federal Reserve noted that investors are pricing in a lower trajectory for interest rate rises than members of the Fed itself.
A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.
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An independent Scotland could lay claim to a part of the United Kingdom's 310-tonne gold reserves if votes go in favour of the "Yes" campaign this month, with ownership of Britain's bullion hoard up for negotiation along with other assets.
Investors were also eyeing developments geopolitical tensions over the Ukraine crisis. Russia signalled on Monday it might ban Western airlines from flying over its territory as part of an "asymmetrical" response to new European Union sanctions over the Ukraine crisis.
In news from the physical markets, the U.S. Mint said it will cease accepting dealer orders for its American Eagle platinum bullion coins after Oct. 1 as demand tumbles, and plans to make fewer platinum coins for investors next year.
Top buyer China is back from a holiday on Tuesday, and premiums on the Shanghai Gold Exchange will be watched to gauge the strength of buying interest in the market.
(Reporting by A. Ananthalakshmi; Editing by Joseph Radford)