By Sumita Layek
BENGALURU (Reuters) - Gold prices slipped on Monday, pressured by a rallying dollar and the metal's failure to break above a key technical level.
Spot gold fell 0.4 percent to $1,221.21 per ounce at 11:59 a.m. EDT (1559 GMT), having hit a 2-1/2-month peak last week at $1,233.26 per ounce.
Prices were on track to register their biggest daily percentage decline since Oct. 12.
U.S. gold futures fell 0.4 percent to $1,224.30.
"The strength of the dollar and the gold market's inability to trade above the 100 day moving average (at $1,224) has given people the impression that gold has no chance of rallying," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
The dollar rose against a basket of major currencies, denting demand for gold, which is priced in the U.S. currency, while Wall Street failed to capitalise on gains in European and Asian stock markets.
Despite the market gathering a fair amount of technical momentum last week, breaking free of stock market fluctuations, some analysts said the outlook was not straightforward.
"The fundamental outlook for gold is still looking a little bleak despite the recent recovery, so I would not be surprised if gold was to falter from here," said Fawad Razaqzada, an analyst with Forex.com.
Gold speculators cut their net short position in COMEX gold contracts by 65,637 contracts to 37,372 contracts, the smallest since late July, in the week to Oct. 16, data showed.
In other precious metals, palladium surged 3.62 percent to $1,119.60 per ounce, having hit its highest in more than nine months at $1,123.20.
The autocatalyst metal has seen fresh buying on the back of a recovery in Chinese equity markets, said Pehowich. Industrial commodities tend to benefit from sharper appetite for risk.
Promises of tax cuts and coordinated official statements of support for stock markets in the world's second-largest economy saw Chinese shares stage their biggest one-day surge in three years.
Meanwhile, silver was 0.2 percent lower at $14.56, while platinum slid 1.1 percent, to $820.90.
(Reporting by Sumita Layek and Arpan Varghese; additional reportig by Karthika Suresh Namboothiri in Bengaluru; Editing by Jan Harvey and Chizu Nomiyama)
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Updated Date: Oct 23, 2018 00:05:56 IST