PRECIOUS-Gold Prices drop as companies in dollar move closer to Fed rate hike

* Chinese markets closed this week

* Palladium down, moving away from the 8-month high of the last session (price of updates, adds quote)

By Vijaykumar Vedala

BENGALURU, Oct 1 (Reuters) – Gold prices fell on Monday as the dollar strengthened against its peers after the US Federal Reserve said last week that it would pursue tougher monetary policy. .

The Fed raised US interest rates last week and announced that it expects four further increases by the end of 2019 and another by 2020, in a context of sustained economic growth and a market for solid work.

Higher interest rates in the United States tend to boost the dollar and push bond yields, which puts pressure on the price of gold by increasing the opportunity cost of the holding of non-productive ingots.

Spot gold was down 0.5% at $ 1,186.29, at 0748 GMT. In the previous session, gold reached its lowest level since August 17, at $ 1,180.34 an ounce.

Futures on US gold fell 0.5% to $ 1,190.60 an ounce.

"Gold prices remain dependent on the dollar at this stage. The US economy has been rosy and better than expected. The Trump administration's efforts to reduce the trade deficit from an economic point of view have also been supportive of the greenback, "said Barnabas Gan, an analyst at OCBC.

Gold prices should experience less volatility as Chinese markets are closed for a week, on the occasion of the Golden Week celebration, said Gan.

The dollar index was up 0.1% from a basket of major currencies and was near a peak of nearly three weeks in the previous session.

Gold has fallen about 13% from its peak in April, mainly due to the stronger dollar, which has been boosted by a vibrant US economy and fears of a strong US dollar. a global trade war. Investors bought the greenback instead of gold as a safe investment.

Meanwhile, the United States and Canada signed a last-minute deal Sunday to save the North American Free Trade Agreement (NAFTA) as a trilateral pact with Mexico. collapse after nearly a quarter of a century.

"NAFTA has not had an immediate response on gold. But in the longer term, it should be good for the dollar, "said Benjamin Lu, commodity analyst at Phillip Futures.

"There is still a lot of downward pressure on gold … The widening of interest rate differentials and the upward trend in US economic performance are weighing on gold. . At least in this quarter, basically, it is very difficult to earn gold. "

Gold speculators increased their net net position from 2,923 lots to 77,313 lots, the largest in three weeks in the week to September 25, according to CFTC data.

Among other precious metals, palladium fell 0.7% to $ 1,065.22, after peaking at $ 1,094.60 an ounce over eight months.

Silver slipped 0.3% to $ 14.56 an ounce, while platinum fell 0.2% to $ 810.65 an ounce. (Report by Vijaykumar Vedala in Bangalore, edited by Joseph Radford, edited by Richard Pullin and Sherry Jacob-Phillips)