By Apeksha Nair
(Reuters) - Gold hit its lowest in over two weeks on Monday, as the dollar climbed to a three-month high versus the yen after Japan's ruling bloc scored a big win in Sunday's election, leaving the door open to ultra-loose monetary policy for longer.
Spot gold was down 0.4 percent at $1,275.81 an ounce by 0637 GMT, after hitting its lowest since Oct. 6 at $1,273.80 earlier in the session.
U.S. gold futures for December delivery fell 0.3 percent to $1,277.30 per ounce.
"This move is just really because of the dollar strength," said Yuichi Ikemizu at ICBC Standard Bank in Tokyo.
"There's no news on North Korea this past week or so. If some news comes out, gold might be supported but at the moment people are just watching the dollar."
Geopolitical risks can boost demand for safe-haven assets such as gold and the Japanese yen.
Japanese Prime Minister Shinzo Abe's Liberal Democratic Party-led (LDP) coalition won a combined 312 seats, keeping its two-thirds "super majority" in the 465-member lower house, local media said.
Abe's victory eased fears that the economic steps implemented under his leadership - such as the Bank of Japan's super easy monetary policy - would be disrupted and halt the yen's depreciation against the dollar.
The dollar also rose against a basket of major currencies, supported by a rise in U.S. Treasury yields and progress in tax reforms.
Meanwhile, U.S. President Donald Trump is considering nominating Federal Reserve Governor Jerome Powell and Stanford University economist John Taylor for the central bank's top two jobs.
Powell is considered less hawkish than Taylor who is seen advocating higher interest rates.
Current Chair Janet Yellen, whose term expires in February, on Friday said the Fed's tools must remain part of its arsenal as long as the economy remains stuck in a low interest-rate economy.
Higher U.S. interest rates tend to boost the dollar and push bond yields up, putting pressure on the greenback-denominated, non-yielding gold.
Spot gold may seek support in a narrow zone of $1,271-$1,273 per ounce before bouncing towards $1,283, Reuters technicals analyst Wang Tao said.
Hedge funds and money managers reduced their net long position in COMEX gold contracts for the fifth straight week, in the week to Oct. 17, U.S. data showed on Friday.
In other precious metals, silver was down 0.2 percent at $16.97 an ounce.
Platinum fell 0.5 percent to $916 an ounce and palladium dropped 0.4 percent to $971.20.
(Reporting by Apeksha Nair in Bengaluru; Editing by Subhranshu Sahu)
Disclaimer: No Business Standard Journalist was involved in creation of this content
