Gold prices fell to their lowest in over five months on Friday, hit by a broad sell-off in commodities as well as surging bond yields on speculation a splurge of U.S. infrastructure spending could stoke inflation.
Spot gold fell 2.8 percent to $1,222.20 an ounce by 1:48 p.m. EDT after touching a session low of $1,229.04, the weakest since June 3. It has shed over 5 percent so far this week.
U.S. gold futures fell 3.4 percent to $1,223.20 per ounce after falling to $1,228.50, the weakest since June 3.
"There's a broad based commodity sell-off. Copper and nickel are getting hit and it's spilled over into precious," a European trader said.
Gold was already slightly weaker before base metals reversed and went into negative territory after a sizzling rally, while oil extended losses.
"We're seeing a complete reassessment of various asset classes following the Trump win earlier this week. The combination of rising real yields and the stronger dollar is really hurting sentiment in gold," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
The dollar was on course for its best week in a year, driven by expectations of rising U.S. inflation if President-elect Donald Trump delivers on promises to boost public spending and put barriers on cheap imports.
The market is also betting on the Federal Reserve raising interest rates more quickly. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
But the weakness in gold may be short-lived, Commodities Economist Simona Gambarini at Capital Economics said in a note.
"The euphoria about infrastructure spending could soon be replaced by concerns about a trade war and geopolitical risks, restoring the safe-haven bid for gold."
In Asian trading, gold had been supported on the downside by physical buying.
Gold premiums in India jumped to their highest in 21 months, as demand surged after the government abolished two high-value currency notes, while bargain hunting propped up demand and premiums in leading consumer China.
The dollar index, which measures the greenback against a basket of major currencies, fell 0.1 percent to 98.672 on Friday.
was up 1.44 percent at $18.81 an ounce, heading for a fourth consecutive weekly rise.
was 0.5 percent higher at $976.50 an ounce after hitting a two-week low of $958.50 earlier in the session.
was up 1.06 percent at $695.90 an ounce after rising to its highest since Oct. 5 at $697.90 earlier.