By Apeksha Nair
(Reuters) - Gold slipped to its lowest level in over two weeks on Monday as equities rallied and the dollar firmed, while prospects of monetary policy tightening in the United States ahead of a Federal Reserve meeting also weighed on the metal.
Spot gold was down 0.2 percent at $1,317.00 an ounce, as of 0423 GMT. Earlier in the session, it hit $1,315.10, its lowest since Aug 31.
U.S. gold futures for December delivery fell 0.3 percent to $1,321.10 an ounce.
"Further risk-taking appetite left gold prices in the dust," said OCBC analyst Barnabas Gan.
Asian shares hit a decade high on Monday and the dollar held firm near a seven-week high against the yen, in the start to a week in which the Fed is likely to announce balance sheet tapering.
The two-day Fed Open Market Committee meeting, which begins on Tuesday, will be closely watched by markets as the U.S. central bank is expected to announce balance sheet reduction in an effort to "normalise" monetary policy.
"Gold prices also came under some selling pressure, with investors dismissing geopolitical risks and instead focusing on the possibility of rate hikes from central banks," ANZ analyst Daniel Hynes said in a note.
"Expectations of a rate hike by the Fed in December have risen sharply in recent weeks."
Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which the metal is priced.
Investors largely brushed aside concerns on the geopolitical front after a relatively quiet weekend in the Korean peninsula.
U.S. Ambassador to the United Nations Nikki Haley said on Sunday the U.N. Security Council has run out of options on containing North Korea's nuclear program and the United States may have to turn the matter over to the Pentagon.
North Korea issues will likely take centre stage when Trump addresses world leaders at the United Nations for the first time on Tuesday.
Spot gold may drop to $1,309 per ounce, as it has broken a support at $1,321, said Reuters technical analyst Wang Tao.
Meanwhile, data showed speculators raised their net long position in COMEX gold contracts for the ninth straight week, bringing it to a one-year high in the week to Sept. 12.
In other precious metals, silver slipped 0.3 percent to $17.53 an ounce, after earlier hitting its lowest since Sept. 1.
Platinum was little changed at $963.35 an ounce, while palladium gained up to 0.5 percent at $927.47.
(Reporting by Apeksha Nair and Arpan Varghese in Bengaluru; Editing by Neil Fullick and Sherry Jacob-Phillips)
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