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Gold hit a more than five-week low on Monday, hurt by an elevated dollar and U.S. bond yields ahead of the Federal Reserve's July meeting minutes this week that could shed light on the appetite for higher interest rates.
Spot gold was down 0.4% to $1,906.69 per ounce by 1224 GMT, hitting its lowest level since July 6. U.S. gold futures fell 0.4% to $1,938.60.
The dollar climbed to its highest level in over a month on concerns about China's economy, making greenback-priced bullion more expensive for overseas buyers, while benchmark 10-year Treasury yields rose.
"With the consumer prices and producer prices coming up slightly higher than expected at the end of last week, some of the certainty regarding the end of the hiking cycle of the Fed has fizzled out," said ActivTrades senior analyst Ricardo Evangelista.
U.S. consumer prices increased moderately in July while producer prices rose slightly more than expected, consistent with a moderation in inflationary pressures that could persuade the Fed to leave interest rates unchanged next month.
Higher interest rates and Treasury bond yields raise the opportunity cost of holding non-interest-bearing gold.
Markets were awaiting U.S. retail sales figures on Tuesday, followed by the minutes of the Federal Open Market Committee's (FOMC) July meeting on Wednesday.
"Fed minutes this week will be decidedly hawkish and, therefore, gold may remain under pressure and drop to perhaps as low as $1,900, or even $1,880," said Clifford Bennett, chief economist at ACY Securities.
Reflecting investor sentiment, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell to the lowest level since January 2020.
Silver fell 0.4% to $22.58, having matched a low last seen on July 6. Platinum dropped 1.1% to $902.45, while palladium lost 1% to $1,280.34.
(Reporting by Deep Vakil and Swati Verma in Bengaluru; editing by David Evans and Jason Neely)