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Gold eases on firm dollar, stronger equities

[BENGALURU] Gold slipped on Monday on a firmer dollar and stronger Asian equities, but stayed above the key psychological level of US$1,300.

The metal gained about 0.9 per cent on Friday after US President Donald Trump warned he might ultimately end a 2015 nuclear agreement with Iran and after data showed underlying inflation remained muted in the United States.

The weaker-than-expected US inflation print helped push Treasury yields lower, giving a fillip to gold trade above US$1,300, said John Sharma, an economist with National Australia Bank.

The recent rise in the dollar as Treasuries shed some of their earlier gains put a bit of downward pressure on gold, Mr Sharma added.

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Spot gold was down 0.2 per cent at US$1,302.51 an ounce as of 0358 GMT, while US gold futures for December delivery were unchanged at US$1,304.80 per ounce.

The dollar edged up but lacked momentum, while the euro was on the defensive after Austria's election and on concerns over Catalonia's confrontation with Madrid.

Asian shares, meanwhile, advanced to new highs following the lead of Wall Street, while escalating tensions between Iraq and Kurds saw US oil futures jump.

Senior Trump administration officials said on Sunday that the United States was committed to remaining part of the Iran nuclear accord for now, despite Trump's criticisms of the deal and his warnings that he might pull out.

"There're obviously some geopolitical issues... but at the moment investors are still focused on the United States," ANZ analyst Daniel Hynes said.

"The market's still surely pricing in a rate hike this year by the Federal Reserve." The US economy remains strong and the strength of the labour market calls for continued gradual increases in interest rates despite subdued inflation, Fed Chair Janet Yellen said on Sunday.

Rising interest rates tend to boost the dollar and push bond yields up, putting pressure on the greenback-denominated, non-yielding gold.

"Prices have established themselves above US$1,300, although upside may be little bit limited, so we would expect to see them remain at US$1,300-1,310 mark over the course of the week," said Mr Hynes.

Spot gold may break a resistance at US$1,305 per ounce and rise to the next resistance at US$1,318, Reuters technicals analyst Wang Tao said.

Speculators cut their net long position in COMEX gold contracts for a fourth straight week in the week to Oct 10, data showed on Friday.

Silver was flat at US$17.35 an ounce after hitting its highest since mid-September earlier in the session.

Platinum eased 0.2 per cent to US$942.50 an ounce, while palladium was 0.4 per cent higher at US$992.40.

REUTERS