NEW YORK/LONDON - Gold fell to its lowest in nearly seven weeks on Monday as rising U.S. Treasury yields pushed the dollar higher while concern over violence during Catalonia's independence vote at the weekend weighed on the euro.
"The recent sell-off is mostly related to a stirring of the reflation trade following the announcement by the Trump administration of the long-awaited tax reform proposal," Mitsubishi analyst Jonathan Butler said.
Spot gold was down 0.4 percent at $1,273.78 per ounce by 1:46 p.m. EDT (1746 GMT), after touching $1,270.60, the lowest in nearly seven weeks. U.S. gold futures for December delivery settled down $9, or 0.7 percent, at $1,275.80 per ounce.
"The funds have been seeing liquidation," said George Gero, managing director of RBC Wealth Management in New York.
World stock markets climbed on Monday on optimism over the corporate earnings outlook and U.S. President Donald Trump's tax reform plan, while the U.S. dollar gained after a manufacturing index rose to its highest since 2004.
Benchmark U.S. 10-year Treasury note yields hit their highest since mid-July on expectations that the Federal Reserve will increase U.S. interest rates for a third time this year, upbeat U.S. data and talk of a possibly more hawkish successor to Fed Chair Janet Yellen.
The euro also came under pressure after Spanish police used batons and rubber bullets in an effort to thwart an independence vote in Catalonia on Sunday, injuring hundreds. The euro zone single currency was down 0.6 percent versus the dollar
Rising yields typically make bonds more attractive compared to gold while strength in the dollar makes assets priced in the U.S. currency more expensive for buyers holding other currencies.
Among other metals, silver was down 0.1 percent at $16.59 an ounce after marking its lowest since Aug. 9. Platinum rose 0.5 percent at $914.10 per ounce, after hitting its lowest since mid-July.
Palladium was down 2.3 percent at $913.00 per ounce. Platinum held in a historically unusual discount to sister metal palladium for a fourth session.
"There is arguably speculative froth in the palladium price, so a short-term correction is likely," GFMS analyst Ross Strachan told the Reuters Global Gold Forum on Monday.
"However, the longer-term picture is one where the sharp downward path for stocks of palladium mean that eventually (it) is likely to reach a sustained premium over platinum. Our new forecasts show that on an annual average basis we expect palladium to exceed platinum in 2019."
(Additional reporting by Apeksha Nair in Bengaluru; Editing by David Goodman and James Dalgleish) ((Renita.Young@tr.com; desk 1 646 223 8699; cell 1 312 505 3359))