Gold falls sharply on Fed rate outlook

Gold futures on the COMEX division of the New York Mercantile Exchange fell sharply on Monday amid expectations that the U.S. Federal Reserve plans to move closer to raising interest rates.

The most active gold contract for February delivery lost 14.8 U. S. dollars, or 1.21 percent, to settle at 1,207.7 dollars per ounce.

The Fed will start its two-day meeting on Tuesday to discuss the pace of interest rate rise after holding its benchmark rate close to zero percent since 2008. A sooner-than-expected rate hike could boost the U.S. dollar and crimp metal price.

Oil prices dropped to a five-year low under fresh selling pressure on Monday as the United Arab Emirates said OPEC will not reduce production in response to the slump.

The gold price also went down with oil prices as gold taking its cue from the oil market more frequently.

U.S. industrial production advanced 1.3 percent in November, after edging up 0.1 percent in October, the Fed said on Monday. Manufacturing output, the largest component of the overall industrial production, rose 1.1 percent in November, the largest gain since February. Monday's data shows a sign of an improving U. S. economy.

Silver for March delivery lost 49.4 cents, or 2.9 percent, to close at 16.563 dollars per ounce. Platinum for January delivery lost 16.6 dollars, or 1.35 percent, to close at 1,214.9 dollars per ounce.