Dollar Gains Weigh on Gold as Italy Vote Raises Euro Concerns

Gold prices dropped to near a 10-month low on Friday as the dollar gained against the euro following Italy's referendum vote. The price of bullion initially rose by 0.9 percent before falling 1.3 percent to $1,162.45 an ounce.

The dollar's gain against the euro has raised concerns over Italy's future in the euro region, but Bloomberg notes that a 'no' vote is unlikely to trigger a quick exit due to the nation's political and legal system.

Ole Hansen, head of commodity strategy at Saxo Bank A/S, said that gold remains under pressure from the liquidation of longs in futures and ETFs. The rotation out of precious metals into industrials has taken over once again, he added.

The prospects of higher U.S. interest rates have curbed the appeal of bullion, which doesn't pay any yield. Investors sold metal from exchange-traded funds for a 16th day on Friday, with holdings dropping 2.2 metric tons to 1,859.3 tons, the lowest since June.