Investing.com - Gold prices slipped lower on Monday, after New York Federal Reserve President William Dudley signalled the possibility for an upcoming U.S. rate hike, sending the dollar broadly higher.
Comex gold futures were down $1.78 or about 0.14% at $1,295.82 a troy ounce by 09:00 a.m. ET (13:00 GMT).
The greenback was boosted after Dudley said the Fed is on track to gradually raise interest rates given factors depressing inflation are "fading" and the U.S. economy's fundamentals are sound.
“I expect inflation will rise and stabilize around the (Fed's) 2% objective over the medium term," he said before adding that "in response, the Federal Reserve will likely continue to remove monetary policy accommodation gradually."
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.41% at 92.33, the highest since September 21.
Gold is sensitive to moves higher in both U.S. rates and the dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
Market participants were also looking ahead to a speech by Federal Reserve Chair Janet Yellen titled "Inflation, Uncertainty, and Monetary Policy" at the National Association for Business Economics' Annual Meeting on Tuesday.
Elsewhere, investors were still digesting the weekend's election results in Germany, which showed growing support for a far-right party.
Chancellor Angela Merkel won a fourth term in office on Sunday but will have to build a coalition to form a government as Conservatives lost support in the face of a surge by the anti-immigration Alternative for Germany (AfD).
Elsewhere on the Comex, silver futures fell 0.26% to $16.94 a troy ounce.