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[NEW YORK] Gold prices retreated to a near five-month low on Tuesday as investors braced for a widely expected US interest rate increase this week and looked for clues about further hikes from the Federal Reserve.
Spot gold fell 0.1 per cent to US$1,240.64 an ounce by 1.36pm EST (1836 GMT), after hitting its lowest since July 20 at US$1,235.92.
US gold futures for February delivery settled down US$5.20, or 0.4 per cent, at US$1,241.70 per ounce.
Global markets are watching the US central bank's two-day meeting for clues about the Fed's future rate path.
"The rise is already in the price so it's more about the outlook the Fed gives," said ABN Amro commodity strategist Georgette Boele.
Gold is highly sensitive to rising US interest rates as these increase the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced.
Higher equity prices and an increased interest in crypto currencies, including bitcoin, have likely stolen the shine from gold lately, causing prices to break below the most recent trading range, said Josh Graves, senior commodities strategist at RJO Futures in Chicago.
Between mid-October and early-December, gold prices had stayed between US$1,265 and US$1,300 an ounce.
"The path of least resistance is down on the FOMC meeting,"Graves said of the metal's response to outgoing Fed Chair Janet Yellen's last meeting in charge. "We will likely see continued selling down to a psychological US$1,200 area before you see any recovery."
In other markets, US stocks hit record levels as Boeing rose and bank stocks gained, while the dollar strengthened.
Oil prices slipped after peaking above US$65 a barrel for the first time since mid-2015 on an unplanned shutdown of the UK's biggest North Sea oil pipeline.
Among other precious metals, silver dropped 0.3 per cent at US$15.66 an ounce.
Platinum fell for its eight straight session, down 0.9 per cent at US$876.60 an ounce, after earlier touching its lowest since February 2016 at US$868.80.
Platinum is more heavily used in diesel vehicles, which have fallen out of favor since Volkswagen's emissions-rigging scandal.
Its sister metal, palladium, has benefited from the switch to petrol engines and expectations for growth in hybrid gasoline-electric vehicles.
Palladium was unchanged at US$1,010 per ounce.
The platinum discount to palladium widened to around US$120 last week, the steepest since April 2001.