PRECIOUS-Gold plunges on stronger dollar, Fed tightening expectations

By Ishaan Arora and Pablo Sinha

March 23 (Reuters) - Gold fell more than 8% at one point on Monday, hitting a four-month low, after logging its biggest weekly loss in about 43 years, as investors rushed to unwind positions amid a strengthening dollar and growing expectations of U.S. rate rises.

Spot gold XAU= declined 4.9% to $4,266.47 per ounce by 1017 GMT, extending losses into a ninth straight session. It had shed more than 8% to $4,097.99 earlier in the session to its lowest level since November 24.

The precious metal has fallen about 22% since the Middle East conflict began on February 28, and has retreated about 25% from its record peak of $5,594.82 reached on January 29.

U.S. gold futures GCcv1 for April delivery dropped 6.7% to $4,267.50.

The dollar and benchmark 10‑year U.S. Treasury yields rose, pressuring gold prices.

While gold is traditionally viewed as a hedge against inflation, rising energy prices due to the Iran war have raised the prospect of higher interest rates, dimming non-yielding bullion's appeal.

"Markets no longer see any Fed rate cuts this year and have started pricing in chances of hikes, boosting the U.S. dollar and compounding bullion's weakness," said Nikos Tzabouras, senior market analyst at Jefferies-owned Tradu.com.

"Meanwhile, gold also falls victim to a search for cash and a rotation into energy commodities."

Oil held above $110 per barrel on Monday O/R.

Market bets on a U.S. rate hike this year have surged, with futures now implying the Federal Reserve is likelier to raise rates than cut them by the end of 2026, according to CME's FedWatch tool.

Gold's fall to its lowest level since November has seen it return to its 200-day moving average.

However, some analysts say the broader trajectory for gold could remain positive, with the metal up about 42% on a one-year basis.

"Once the dust settles and the current wave of forced selling runs its course, the outlook for gold in particular may improve again quite sharply," said Ole Hansen, head of commodity strategy, Saxo Bank, in a note.

Other precious metals also declined sharply, with spot silver XAG= declining 5.5% to $64.01 per ounce and platinum XPT= slipping 7.2% to $1,783.30. Both metals earlier hit their lowest levels since mid-December.

Palladium XPD= shed 2.1% to $1,374.73.