NEW YORK (MarketWatch) -- Gold futures fell Monday, dropping to their lowest level in two weeks as tumbling oil prices and a stronger dollar curbed the metal's appeal as an inflation hedge and an alternative investment.
Crude oil futures dropped more than 4%, pressured by escalating worries over the timing of a recovery in the global economy. Jitters over impending second-quarter corporate earnings left investors less eager to hold risky assets, helping the dollar move higher.
On the Comex division of the New York Mercantile Exchange, August gold futures fell $8.50, or 0.9%, to $922.50 an ounce. It fell to $920.30 earlier, the lowest level for a front-month contract since June 23.
"A firmer U.S. dollar and falling oil prices are undermining gold's role as a hedge against currency and inflation risks, so higher risk aversion and falling equity markets are not having much of an impact at present," Commerzbank analysts led by Barbara Lambrecht wrote in a note.
"The dollar will remain the key determinant for gold prices," they added.
The London afternoon gold fixing, a benchmark for gold's spot trading, stood at $924.50 an ounce Monday, down $8 from the previous session.
Gold ended last week's trading down 1.1%. The metal had risen near $990 an ounce early June, but has since declined about 7%.
"Gold is vulnerable to a deeper correction in the short to medium-term, and will need to come lower to stimulate renewed institutional level investment demand as well as interest from the physical sector," said James Moore, a precious metals analyst at TheBullionDeks.com.
Gold's losses on Monday followed broad declines in commodities and equities. Crude tumbled to its lowest level since May 27.
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