· Gold hit a more than two-week low on Monday as expectations that Japan's ultra-loose monetary policy would stay in place after Prime Minister Shinzo Abe's election victory at the weekend lifted the dollar to a three-month high versus the yen.
· Abe's win also fed into positive sentiment in equity markets that were buoyed last week by fresh optimism about tax cuts in the United States, curbing interest in gold as an alternative asset.
· Spot gold was down 0.4 percent at $1,275.80 an ounce by 1130 GMT, having touched its lowest since Oct. 6 at $1,273.61. U.S. gold futures for December delivery fell by $3.50 to $1,277.00.
· "(Gold) is just following what the dollar is doing," said Natixis analyst Bernard Dahdah. "People are also getting more excited about the stock markets, and that removes a bit of business from gold."
The metal could drift down towards the $1,250 level by early December, he said, as the prospect of a further U.S. interest rate hike weighs.
· The dollar had already posted its biggest one-day gain in a month on Friday after the U.S. Senate approved a budget blueprint for the 2018 financial year, allowing Republicans to pursue a tax-cut package without Democratic support.
· Financial markets are now awaiting guidance on who will succeed Federal Reserve chair Janet Yellen when her term expires in February.
· U.S. President Donald Trump is considering nominating Fed Governor Jerome Powell and Stanford University economist John Taylor for the central bank's top two jobs. Powell is considered less hawkish than Taylor, who is seen advocating higher interest rates.
· "As the path toward tax reform in the U.S. begins to take shape and the identity of next Fed Chair becomes clearer, we are likely to see the U.S. dollar strengthen further against majors," MKS said in a note on Monday.
"Tensions on the Korean peninsula, however, continue to weigh upon participants' minds and as a result we are likely to see interest towards $1,250 restrict further (gold) declines."
· Hedge funds and money managers cut net long positions in COMEX gold contracts for the fifth straight week in the week to Oct. 17, U.S. data showed on Friday.
· Among other precious metals, silver eased by 0.3 percent to $16.95 an ounce, platinum was down 0.9 percent at $912.24 and palladium lost 1.4 percent to $961.72.
Reference: Reuters
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