Gold dips to 4-week low on US rate hike fears

Spot gold eased 0.1 percent to USD 1,140.40 an ounce by 0029 GMT, after earlier dropping to USD 1,134.60, its lowest since October 5.

The metal had posted its worst weekly drop in nine weeks on Friday after the Fed surprised with a direct reference to its next policy meeting as a possibility for the first US rate hike in nearly a decade.

Gold had rallied last month on speculation that the softness in the global economy could prompt the US central bank to delay the rate hike to next year. But the Fed's hawkish tone triggered a sell-off in the metal.

Rising interest rates tend to weigh on gold because they lift the opportunity cost of holding non-yielding bullion.

Traders have said the technical picture for gold has deteriorated, warning of further price drops.

A decline in the dollar on Monday failed to offer any support for gold.

Investors are cutting back on their gold exposure.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.3 percent to 692.26 tonnes on Friday.

Speculators trimmed a bullish bet in gold from an 8-1/2-month high in the week ended Oct. 27, while they hiked a net long stance in silver to the highest level on record , US government data showed on Friday.

Physical buying wasn't strong enough to offer price support. Gold demand in Asia saw some uptick towards the end of last week, as lower prices attracted buyers. But local premiums remained largely unmoved, a sign that demand hasn't picked up in a significant way.

US Mint American Eagle gold coin sales slumped 73 percent in October, data showed on Friday.