By Karen Rodrigues
BENGALURU (Reuters) - Gold prices fell to a more than six-month low on Tuesday, pressured by prospects of rising U.S. interest rates amid a strengthening economy.
Spot gold was down 0.3 percent at $1,260.72 an ounce, as of 0800 GMT, after touching its weakest since Dec. 18, 2017 at $1,257.74 earlier in the session.
U.S. gold futures for August delivery were 0.5 percent lower at $1,262.40 per ounce.
"Rising trade tensions should have (but did not) help gold's cause all that much. Instead, it seems that the concern of rising interest rates, particularly in the U.S., continues to gnaw away at gold, as does the fact that the fund length is fleeing," INTL FCStone analyst Edward Meir said in a note.
U.S. Fed Chairman Jerome Powell last week said the central bank should continue with a gradual pace of interest rate rises amid a strong economy to balance its employment and inflation goals.
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Gold, which is highly sensitive to rising U.S. interest rates, could see demand take a hit from higher rates, as these tend to boost the dollar and push bond yields up.
"Trade tensions aren't helping gold at all, there is only one clear trend which is skewed to the downside. By looking at the chart, it appears that bulls have left the town," said ThinkMarkets chief market analyst Naeem Aslam.
World stocks extended a sell-off on Tuesday as escalating trade tussles between the United States and other major economies steered investors away from riskier assets, with markets in China bearing the brunt of investor anxiety.
U.S. Treasury Secretary Steven Mnuchin said that forthcoming investment restrictions from the department will not be specific to China but would apply "to all countries that are trying to steal our technology."
Gold, usually seen as a safe store of value during economic and political uncertainty, has found only limited support from the ongoing global trade spat.
"The market certainly looks susceptible to some further declines until data shows any sort of weakness in the U.S. economy in particular," said ANZ analyst Daniel Hynes.
Gold-backed exchange-traded funds tracked by Thomson Reuters were headed for their weakest month since July 2017, as investors covered losses in equities, commodities and other markets caused by tariff disputes.
In other precious metals, silver was down 0.4 percent at $16.24 an ounce.
Platinum fell 0.7 percent to $858.22 an ounce.
Palladium was 0.1 percent lower at $938.51 per ounce. It touched a more than two-month low at $936 an ounce in the previous session.
(Reporting by Karen Rodrigues in Bengaluru; Editing by Amrutha Gayathri and Subhranshu Sahu)
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