Gold extended losses on Thursday to slip to its lowest in nearly a week as a firmer dollar and rising bond yields triggered more selling, traders said.
Gold fell as low as $649.90 an ounce, the weakest since June 15, and was quoted at $652.00/652.50 by 1435 GMT, down from $654.50/656.00 in New York late on Wednesday, when it dropped around one percent on weaker oil prices.
We need to hold $650 to avoid being back where we started in the middle of last week, said Simon Weeks, director of precious metals at ScotiaMocatta
I think with the firmer U.S. dollar and moves in bonds and equities etc, the reasons to be buying have been unwound again.
Expectations of rising global interest rates pushed government bond yields higher on Thursday, driving European stocks down and sending the dollar to a 4-1/2-year high against the yen.
Higher interest rates make zero-yielding gold less attractive as an asset.
Traders said the metal was vulnerable to selling at key technical levels on any move higher as investors, who have witnessed gold's shaky performance in the recent past, might be tempted to take profits.
Gold tried to push past $661 on Tuesday and Wednesday but was capped by offers from one particular market participant, traders said.
The foundations of the rally were not built on solid ground, Weeks said.
Shuji Sugata, manager at Mitsubishi Corp Futures and Securities Ltd, said the market looked reluctant to chase gold above $660 and platinum above $1,290 ahead of next week's Federal Reserve meeting.
The U.S. Federal Reserve's Federal Open Market Committee begins a two-day meeting on interest rates on June 27.
With mixed signals from the United States, gold is likely to be very directionless until more clarity is obtained on the health of the economy, Standard Bank said in a weekly commodities note.
Gold barely reacted to news that South African trade unions had declared a dispute, the first legal step towards a strike, after the country's three biggest gold producers failed to submit a wage offer on Wednesday.
South Africa, the world's biggest gold producer, was hit in 2005 by the first industry-wide strike in 18 years, paralysing production for five days.
In other precious metals, silver fell to $13.09/13.13 an ounce from $13.21/13.25 in New York, while platinum declined to $1,288/1,292 an ounce from $1,290/1,294.
Palladium rose to a 6-1/2-week high of $375 an ounce and was quoted at $374/377 from $373/377 in the U.S market.
(Additional reporting by Clare Black in London, Lewa Pardomuan in Singapore and Chikafumi Hodo in Tokyo)