By Jan Harvey
LONDON (Reuters) - Gold slid to its lowest in four months on Thursday as a bounce in the dollar sparked by optimism over U.S. tax reform plans sent the metal out of its recent narrow trading range.
Prioces had been hemmed between $1,265 and $1,300 an ounce since mid-October as a series of record highs in stock markets pulled investment interest from bullion while traders also awaited an expected increase to U.S. interest rates this month.
Gold broke out of that range this week, extending losses after slipping below its 200-day moving average at $1,267.
Spot gold was down 0.8 percent at $1,254.23 by 1235 GMT, off an earlier four-month low of $1,253.56. U.S. gold futures for December delivery were down $9.80 at $1,256.30.
"We've had a (breakdown) of support at $1,260, which is a key level," said ActivTrades chief analyst Carlo Alberto de Casa. "From a technical point of view, many traders had stop-losses just below $1,262, and today the market is going down for this reason."
Strength in the dollar is feeding into this, he said, adding: "That the U.S. dollar is recovering isn't very welcome for the commodities market."
The dollar touched a two-week high on Thursday on optimism that the United States would push through tax reforms, while global equities rebounded after two straight days of losses.
U.S. Senate Republicans agreed on Wednesday to talks with the House of Representatives on sweeping tax legislation, raising hopes that lawmakers could agree on a final bill ahead of a Dec. 22 deadline.
Gold is now awaiting further direction from U.S. non-farm payrolls data this week, a key barometer of the U.S. economy. Next week the Federal Reserve is also expected to announce another rise in U.S. interest rates and to offer guidance on the pace of further increases.
Rising U.S. interest rates increase the opportunity cost of holding non-yielding gold while boosting the dollar, in which it is priced.
"Both the fundamentals and the technicals in gold look somewhat bearish at the moment and we suspect that we could move slightly lower heading into next week's critical Federal Reserve meeting," said INTL FCStone analyst Ed Meir.
Among other precious metals, silver was down 1 percent at $15.81 an ounce after slipping to its lowest since mid-July at $15.78.
Platinum dipped by 0.8 percent to $894.50 after touching its lowest since July 11 at $893. The metal has fallen nearly 5 percent this week and is on track for its biggest weekly loss in nine months.
Palladium firmed by 0.3 percent to $996.50.
(Additional reporting by Apeksha Nair in Bengaluru; Editing by David Goodman)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
