(Reuters) - Gold prices dropped about 2 percent on Monday, after Japan's intervention in the currency market triggered a rapid rally in the dollar, spooking precious metals investors. Japan intervened unilaterally in the foreign exchange market on Monday to curb the yen's strength, sending the dollar up more than 1 percent against a basket of currencies.
A stronger greenback makes dollar-denominated commodities more expensive for buyers holding other currencies.
"The huge spike in the dollar is pressuring gold prices," said Ong Yi Ling, an analyst at Phillip Futures. "But so long as gold stays above $1,700, the sentiment should remain pretty bullish."
Other precious metals weakened in tandem. Spot silver dropped as much as 2.7 percent to $34.28, and the most-active U.S. silver futures contract also lost more than 2 percent to $34.21.
Spot platinum suffered its worst one-day loss in a month with a 2.7-percent slide. Spot palladium fell 1.8 percent to $651.99.
"From here people will play the wind," said a Hong Kong-based gold dealer, "Last week gold rose too quickly and we may see a correction coming." .......read in full
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