Gold hit its lowest since February on Thursday, extending losses after its biggest monthly decline in more than three years, as a surge in oil prices boosted bond yields, denting interest in non-yielding gold as an alternative investment.
The precious metal fell more than 8 percent in November, hurt by a jump in the dollar and Treasury yields after Donald Trump's surprise election to the U.S. presidency last month, and by expectations that the Federal Reserve is gearing up to lift interest rates for only the second time in a decade in December.
"Gold has effectively gone into a downward spiral, triggered by the Trump election and the dollar strength that has come through from that," Oxford Economics analyst Daniel Smith said.
"We see that dollar strength persisting over the next year, so there are a lot of reasons to think gold is going to struggle."
Bond yields have surged since Republican candidate Trump's shock election victory, which led to speculation that his commitment to infrastructure spending would spur growth and inflation.
That pushed the dollar sharply higher, with the U.S. unit hitting its highest since 2003 last week. While it retreated on Thursday, it remains at highly elevated levels.
U.S. 10-year Treasury yields hit 16-1/2 month highs on Thursday. Germany led euro zone government bond yields higher as an 8 percent surge in oil prices boosted expectations of higher inflation.
"The key story for gold is still the combination of a stronger dollar and rising Treasury yields," Julius Baer analyst Carsten Menke said. "Either of the two is not really helping gold at the moment."
"We've seen outflows of around 5 million ounces (from ETFs) since the U.S. election, and these are mainly from the U.S.-listed products," he said. "There is a real rotation away from safe-haven investments, and towards pro-growth assets."
That led to hefty outflows from gold-backed exchange-traded funds, the largest of which, New York-listed SPDR Gold Shares, said its holdings fell nearly 60 tonnes in November, the most of any month since May 2013.
Palladium was up 0.3 percent at $772.20, having outperformed other precious metals last month to rise 24 percent, its best month since February 2008.
"Like the base metals ... we believe that palladium has also become detached from the fundamental data," Commerzbank said in a note. "We see considerable correction potential."