* Euro slips as Germany's Merkel wins but with less support
* Platinum hovers near over eight-week lows hit last week
(Adds analyst commentary, updates prices) Sept 25 (Reuters) - Gold prices dropped on Monday, and hovered around one-month lows hit last week, weighed down by a firm U.S. dollar and as concerns over the Korean peninsula eased over the weekend.
Spot gold fell 0.3 percent to $1,293.35 per ounce at
0418 GMT, not far from last week's near one-month low of $1,287.61. Prices for the yellow metal dropped about 1.7 percent last week, posting their second consecutive weekly decline.
U.S. gold futures for December delivery were nearly
unchanged at $1,297.10 per ounce. "Merkel's win in the German federal elections and a quiet news weekend on the North Korean front, saw the U.S. dollar opening stronger and gold's weekend safe-haven premium eroded from Friday," said Jeffrey Halley, senior market analyst, OANDA.
The dollar index was up 0.1 percent at 92.255 against
a basket of currencies. The euro slipped on Monday after German Chancellor Angela Merkel won a fourth term in a weekend election, but faced leading a much less stable coalition in a fractured parliament as support for the far-right party surged. "I guess markets are relieved about the ongoing sanctions against North Korea. If you see what China and (U.S. President Donald Trump) have done last week, it seems they are trying to achieve a peaceful resolution," said OCBC analyst Barnabas Gan. On Sunday, the United States said it has added North Korea to its list of countries that are banned from entering the country. "The (U.S. Federal Reserve) started its balance sheet reduction last week as well as still pricing in one time rate hike by year-end," Gan noted. Last week, the Fed announced it would begin trimming down its $4.5 trillion in assets and signalled it will likely raise rates again this year. "This still has a strong influence in pushing gold prices lower as well." Meanwhile, physical gold demand remained soft across Asia this week despite a downwards price correction as consumers awaited further dips in rates, while a government move to bring transparency to bullion trading kept buyers on the sidelines in India.
In other precious metals, silver slipped 0.2 percent
to $16.91 per ounce. Prices fell over 3.5 percent last week, its biggest weekly decline since early July.
Platinum inched 0.1 percent lower to $929.70 per
ounce, but hovered around an eight-week low hit on Thursday. It posted its second consecutive weekly fall with a decline of 3.5 percent last week.
Palladium gained 0.5 percent to $921.05 per ounce.
(Reporting by Nithin Prasad in Bengaluru; Editing by Richard Pullin and Sherry Jacob-Phillips)