Gold hits 5-year low as bets mount on Fed hike

Gold hits 5-year low as bets mount on Fed hike

Gold dropped to its lowest in more than five years early on Monday after strong U.S. inflation and housing data spurred expectations that the Federal Reserve will raise interest rates later this year.

Top gold consumer China said on Friday its gold reserves were up 57 percent at the end of June from the last time it adjusted its reserve figures more than six years ago. Despite the tonnage increase, gold now accounts for 1.65 percent of China's total forex reserves, against 1.8 percent in June 2009.

Spot gold fell as far as $1,130.23 an ounce in early deals, its weakest since April 2010, and was down 0.2 percent at $1,131.80 by 0039 GMT.

Selling pressure increased after bullion breached the $1,140 support level on Friday; it lost nearly 3 percent last week, the most since March.

U.S. consumer prices rose for a fifth straight month in June, while housing starts surged and building permits soared to a near eight-year high, bolstering the case for a U.S. rate increase this year.

China's gold reserves stood at 1,658 tonnes at the end of June, the central bank said, up 57 percent from 2009.

"Whatever the amount, there is no hiding the fact that the Chinese have toned down their gold buying significantly over the past 18 months or so, as a combination of slowing economic growth and a crackdown on conspicuous consumption have both combined to dent overall offtake," wrote INTL FCStone analyst Edward Meir.

Platinum remained below $1,000 an ounce after piercing that level for the first time since 2009 on Friday, reflecting rising supply and slower demand from jewelers and the automotive sector.

Hedge funds and money managers cut their bullish stance in Comex gold contracts for a third straight week in the week ended July 14, reducing it to the smallest since records became public, U.S. Commodity Futures Trading Commission data showed on Friday.