Gold slips from six-week high on Monday as rallying equities weighed on the metal's safe-haven appeal

Gold prices fell on Monday as rising bond rates and surging equities weighed on gold's safe-haven appeal as the new year began, pushing it down from a six-week high earlier in the day.

Gold prices ended 2021 down 3.6% for the biggest annual decline since 2015, with economies starting to recover from the coronavirus crisis. Pic: Reuters

Gold prices fell on Monday as rising bond rates and surging equities weighed on gold's safe-haven appeal as the new year began, pushing it down from a six-week high earlier in the day.

By 1131 GMT, spot gold had fallen 0.3 percent to $1,823.63 an ounce, after reaching a high of $1,831.62 on Nov. 22. Gold futures in the United States fell 0.1 percent to $1,826.40.

"The small setback in gold prices is likely driven by positive risk sentiment as gauged by rising equity markets," said UBS analyst Giovanni Staunovo.

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Staunovo predicts that increasing US interest rates and lowering US inflation would weigh on gold in 2022, with a price of $1,650 by the end of the year.

Gold prices ended 2021 down 3.6% for the biggest annual decline since 2015, with economies starting to recover from the coronavirus crisis.

Despite the rising number of coronavirus infections, the number of deaths and hospitalizations caused by the Omicron strain remains relatively modest, prompting many governments to refrain from implementing lockdowns.

Quantitative Commodity Research analyst Peter Fertig said that public holidays in parts of Europe made for low trading volumes, thereby exaggerating price movements in gold.

The dollar ticked up against its major rivals as an upbeat market mood lifted European equities and government bond yields.

"We`ve seen the dollar starting the year on a strong footing and putting a little bit of downside pressure on an otherwise upward moving gold price," said independent analyst Ross Norman.

What seems to be holding up the gold market continues to be the physical investor, Norman said, referring to the market for coins and gold bars.

However, he added that this is not sufficient to propel institutions into exchange-traded funds or the futures markets, where some hefty liquidations and redemptions have occurred.

In other precious metals, silver was steady at $23.27 an ounce, platinum rose 1.8% to $979.44 and palladium was up 0.8% at $1,906.77.

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