Gold drops as China economy growth worries mount

Gold futures on the COMEX division of the New York Mercantile Exchange futures saw renewed selling pressure Monday as global equity markets fell due to worries over tightening credit conditions and growth worries in China.

The most active gold contract for August delivery fell $14.9, or 1.15 percent, to settle at $1,277.1 per ounce. The US and global equities sold off on the day, taking their cue from a sharp drop in Chinese equities following a rise in Chinese money-market rates, according to market analysts.

In addition, the fresh losses for gold came as the US dollar extended its recent advance, with the ICE dollar index rising to 82.521 Monday from late Friday's 82.302. A stronger dollar tends to weigh on gold and other dollar-denominated commodities, as it makes them more expensive to holders of other currencies.

Adding more pressure on gold futures prices, analysts at Goldman Sachs cut their outlook on the metal for 2013 and 2014, citing growing price risks from a brightening US economic picture. The bank now expects gold to end this year at $1,300 an ounce, down 9.4 percent on its previous forecast. It sees gold ending 2014 at $1,050 an ounce, down 17.3 percent on its earlier outlook, according to reports.

Silver for July delivery fell 46.6 cents, or 2.33 percent, to close at $19.493 per ounce.