* Markets look to possible U.S. rate hikes next year
* SPDR Gold holdings down over 12 pct since November
* GRAPHIC-2016 asset returns: reut.rs/1WAiOSC
(Updates throughout, adds LONDON dateline)
By Jan Harvey
LONDON, Dec 20 Gold fell on Tuesday as the
dollar rebounded towards its highest in more than a decade,
after Federal Reserve Chair Janet Yellen's comments on the U.S.
jobs market boosted bets on further interest rate hikes next
The U.S. currency's gains were strongest against the yen,
which slid around 1 percent after the Bank of Japan kept
monetary policy unchanged.
Spot gold was down 0.5 percent at $1,132.81 an ounce
at 1035 GMT, while U.S. gold futures for February
delivery were down $7.90 an ounce at $1,134.80.
"This morning's surge in the dollar to new 13-year highs on
the DXY measure, largely on the back of yen weakening after the
BoJ's decision to leave interest rate unchanged, has put the
skids under gold once again," Mitsubishi analyst Jonathan Butler
The dollar rose, global stock markets added to gains and
U.S. Treasury yields recovered early losses after Yellen sounded
an optimistic tone about the U.S. labour market on Monday.
Gold has fallen 2.5 percent since the Fed hinted after its
latest policy meeting last week that it would raise rates more
quickly than expected next year, lifting the opportunity cost of
holding non-yielding gold, while boosting the dollar, in which
it is priced.
The metal is on track for its biggest quarterly drop in more
than three years, after losing ground in the wake of the Nov. 8
U.S. election as the U.S. currency surged.
Dollar strength cancelled out any additional interest in
gold as a hedge against political risk after a suspected
terrorist attack at a Berlin Christmas market, and the fatal
shooting of the Russian ambassador to Turkey at an Ankara art
gallery on Monday.
"Gold has completely relinquished its safe-haven status for
the time being," Marex Spectron said in a note. "(It) has
removed itself from geopolitical news and is focused solely on
economic news, which basically means the dollar."
The world's largest gold-backed exchange-traded fund, New
York-listed SPDR Gold Shares, said its holdings fell
another 8.9 tonnes yesterday, its biggest one-day outflow since
Dec. 1. The fund's holdings have fallen by 122 tonnes since the
Silver was down 0.7 percent at $15.87 an ounce, while
platinum was 0.5 percent lower at $912.50.
Palladium fell for the fifth straight session, down 1
percent at $669.97. The metal earlier touched a low of $665.98,
its weakest since Nov. 14.
(Additional reporting by Swati Verma and Nallur Sethuraman in
Bengaluru; editing by Susan Thomas)