(Adds analyst comments, updates prices)
* Silver hits more than 3-month high
* Dollar hits one-week high, off multi-year lows
* European shares fall as new coronavirus strain shuts
Britain
* Interactive graphic tracking global spread of coronavirus:
tmsnrt.rs/3mvcUoa
By Asha Sistla
Dec 21 (Reuters) - Gold prices erased earlier gains to fall
by as much as 1.3% on Monday, pressured by an advancing dollar
as fears of a new coronavirus strain gripped markets and forced
tougher restrictions.
Spot gold fell 0.3% to $1,874.91 per ounce by 1115
GMT, having earlier hit its highest since Nov. 9 at $1,906.46.
U.S. gold futures were down 0.6% to $1,877.70.
"Broadly it is a risk-off sentiment. The forex and equities
markets are down. The new variant of the virus has sparked
renewed uncertainty in the market and we are seeing a drastic
risk aversion," said Bank of China International analyst Xiao
Fu.
"Though, gold should gain in these cases as a safe-haven
asset, but generally, during these situations we see the dollar
stealing the show."
The dollar index gained over 1% and rebounded off
multi-year lows to a one-week high as news of a mutant
coronavirus caused a dip in the pound and euro.
European equities also fell in response to stringent
lockdowns in Britain that sowed chaos for families and companies
just days before it exits the European Union's orbit.
Prices earlier in the session jumped more than 1% on reports
that U.S. congressional leaders on Sunday reached agreement on a
$900 billion package to aid the virus-stricken U.S. economy.
"The U.S. fiscal package is supporting inflation
expectations. As a result, the yield of the 10-year U.S. Tips
has fallen the lowest level since September. Falling real rates
are positive for gold," said UBS analyst Giovanni Staunovo.
In other metals, silver rose 1% to $26.02 an ounce,
having hit its highest since Sept. 16 at $27.38, palladium
fell 1.7% to $2,321.36 and platinum dipped 4.7% to
$987.58.
"With Europe being hit again by mobility restrictions, the
platinum market might suffer as well as it is strongly exposed
to Europe, so risk off and with the weakest fundamentals the
metal is suffering," added UBS' Staunovo.
(Reporting by Asha Sistla and Diptendu Lahiri in Bengaluru;
editing by Barbara Lewis)
source: reuters.com