SINGAPORE (Reuters) - Gold extended losses on Wednesday to trade near a nine-month low and looked likely to break below the key $1,200-an-ounce level, clobbered by a stronger dollar and lack of support from top buyer China.
With the dollar at a four-year peak against a basket of major currencies, other precious metals also took a hit. Platinum tumbled to a five-year low, while silver retained sharp overnight losses to trade at its lowest since March 2010.
A stronger U.S. currency makes dollar-denominated precious metals more expensive for holders of other currencies. Worries about an interest rate rise in the United States have also hurt gold, a non-interest-bearing asset.
"As long as the dollar stays strong, the path for gold is likely lower," HSBC analysts said in a note. "Gold continues to dance above $1,200 but may fall below that level, should the dollar rally continue."
Spot gold slipped 0.2 percent to $1,205.90 an ounce by 0623 GMT, falling for the fourth straight session. It went as low as $1,204.40 in the previous session, its lowest since early January.
The metal slid 6 percent in September, its sharpest monthly drop since June 2013, and also logged its first quarterly loss of the year.
Reflecting waning investor sentiment, holdings in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell 2.39 tonnes on Tuesday to 769.86 tonnes, the lowest since December 2008.
Markets in top bullion buyer China are closed for a week from Wednesday for the National Day holiday, weakening support for gold during Asian trading hours and potentially accelerating its fall below $1,200.
Investors were also watching the political unrest in Hong Kong for its impact on equities and possible safe-have bids for gold.
Thousands of pro-democracy protesters thronged the streets of Hong Kong on Wednesday, ratcheting up pressure on the pro-Beijing government.
Among other precious metals, platinum dropped more than 1 percent to $1,272.60 an ounce, its lowest since October 2009. Silver held near a 4-1/2-year low of $16.83.
Platinum and palladium have come under pressure due to weak gold prices, a strong dollar and heavy speculative liquidation, according to HSBC.
Reporting by A. Ananthalakshmi; Editing by Ed Davies and Alan Raybould