Gold dips, down for 7 of last 8 sessions as dollar firms

Gold futures on Tuesday were headed for a seventh drop in eight sessions as the dollar saw firm early gains.

December gold GCZ6, -0.24% fell $3.80, or 0.3%, to $1,256.60 an ounce, while December silver SIZ6, -0.42% fell 5 cents, or 0.3%, to $17.61 an ounce.

The ICE U.S. dollar index DXY, +0.45% was up 0.6% to 97.45.

A stronger dollar often can weigh on dollar-denominated commodities, as they become more expensive for holders of other monetary units.

What’s more, prospects for higher U.S. interest rates could cut demand for gold, which doesn’t bear a yield. No major economic reports were on the U.S. docket Tuesday, leaving financial markets to focus on recent Federal Reserve rhetoric, most of which left the door open to an interest-rate hike yet this year.

“The dollar gains as the market becomes more convinced that Fed will raise rates this year—probability of rate hike in December rises to 68% from 64% before last week’s nonfarm payrolls. [Democratic presidential candidate Hillary] Clinton’s improving position in the polls is also helping USD, as do higher US Treasury yields as rising oil prices pushed up U.S. [market] interest rates,” said Marshall Gittler, head of investment research for FX Primus.

Last week, gold dropped roughly 5% for the week—the largest such loss in three years. But to start the week, gold moved back above the 200-day moving average near $1,260.

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