Gold edges down as dollar steadies

Gold inched lower on Monday as the dollar steadied near a nine-month high, though uncertainty over the timing of a US interest rate hike kept prices hemmed into a range, with traders awaiting US data for further direction.

Signs of improving physical demand in major Asian consumers helped underpin the metal after it snapped three weeks of losses last week to rise 1.3 per cent, analysts said.

Spot gold was at $1,264.43 an ounce at 1128 GMT, down

0.1    per cent, while US gold futures for December delivery were down $2.70 an ounce at $1,265.00.

"Over the last three weeks we`ve had very much a rangebound environment," Mitsubishi analyst Jonathan Butler said. "The strength of the dollar, which is a negative factor for gold, is in large part responsible for that. On the other side, physical demand in Asia has at least given some price support."

"We have the November Fed meeting on the horizon, and the US election - those are the two big macro events," Butler added. "But with a Democratic election victory, and no move on rates in November, nothing really changes for gold."

The Fed is tipped to hike rates in December. Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

The US currency rallied to a near nine-month high against a currency basket in early trade, boosted by expectations the Fed will raise rates this year and a receding chance of Donald Trump becoming US president.

Third-quarter growth figures from the United States and Fed policymakers speeches due this week will be closely watched for clues on a possible interest rate hike.      

Investment interest in gold showed signs of softening last week. US Commodity Futures Trading Commission data showed on Friday that hedge funds and money managers cut their net long positions in COMEX gold for a third week in the week to Oct. 18.

The world`s largest gold-backed exchange-traded fund, SPDR Gold Shares, reported its biggest one-day outflow since April 2013 on Friday, of 16.6 tonnes.