Shafaq News/ Gold prices slipped on Monday as investors opted for alternative safe-haven assets such as the U.S. dollar and bonds after Turkey's abrupt decision to replace its central bank head with a critic of high interest rates sparked financial uncertainty.
Spot gold was down 0.5% at $1,736.71 per ounce by 0600 GMT, having dipped as much as 0.7% earlier in the session. U.S. gold futures were down 0.2% at $1,738.80 per ounce.
"This morning when the Turkish Lira fell out of bid, we might have seen gold benefiting with the dollar and Japanese yen but that's clearly not the case," said Michael McCarthy, chief market strategist at CMC Markets.
"The stronger dollar seems to be the major driver for gold market at the moment with the currency moves ... It appears that U.S. dollar and yen remain the favourite choices."
Turkey President Tayyip Erdogan replaced a hawkish central bank chief with an opponent of tight monetary policy on Saturday, in a shock move that raised concerns about the impact on other financial markets and supported the dollar as a safe-haven currency.
Gold, which is priced in dollar, also lost safe-haven flows to the yen and bonds.
The metal may retest a support at $1,716 per ounce, a break below could cause a fall into the range of $1,669 to $1,691, according to Reuters technical analyst Wang Tao.
Meanwhile, the U.S. Federal Reserve said on Friday it would not extend a temporary pandemic regulatory break on capital requirements due to expire this month.
"The commercial banks will have less tendency to hold or purchase more of U.S. Treasuries so less demand for Treasuries will likely lead to even higher yields on the longer-term curve...that will likely weigh on gold prices even more," said DailyFX strategist Margaret Yang.
Elsewhere, palladium was up 0.2% at $2,639.92, silver slipped 2.5% to $25.60 and platinum fell 1.3% to $1,181.30.