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Investing.com -- Gold futures plunged to six-year lows amid a stronger dollar, as traders brace for a likely interest rate hike by the Federal Reserve next month in a major policy shift that could dampen long-term optimism for the precious metal.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,051.20 and $1,072.60 an ounce, before settling at $1,057.10, down 12.90 or 1.21% on the session. The sell-off marks the sharpest one-day fall in gold in three weeks. Over the last month of trading, gold has only closed in the green in seven of the last 30 sessions, falling nearly 10% during that span. As a result, gold is testing the $1,000 level, a threshold it has remained above for more than six years since the height of the Financial Crisis.

On Friday, gold fell precipitously in post-Thanksgiving trade, a day typically known for light trading. Gold held steady in overnight Asian trading, before dropping sharply just ahead of the open of U.S. markets. Gold inched up by 0.03% on Thursday when U.S. markets were closed for the Thanksgiving holiday.

Investors continued to price in a series of key monetary policy decisions by Central Banks over the next month, starting with the European Central Bank's Governing Council's meeting in Frankfurt on Thursday. In recent weeks, ECB president Mario Draghi has sent strong indications that the central bank could increase the scope of its comprehensive €60 billion a month quantitative easing program at the meeting. On Wednesday, Reuters reported that the ECB could also impose a two-tiered penalty next week for banks that leave deposits at its facility. The ECB's benchmark refinancing rate is at a record low of 0.05%, while rates at the deposit facility are already in negative territory at minus-0.20%.

Less than two weeks later, the Federal Open Market Committee is expected to raise its benchmark Federal Funds Rate for the first time in more than nine years. The rate, which banks charge on interbank overnight loans at the Fed, has remained at a near-zero level since December, 2008. The divergence between monetary policies in the U.S. and the euro zone has sent the dollar soaring, as foreign investors look to pile into the greenback in order to capitalize on higher yields.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.3% to an intraday high of 100.26. The index is now points away from its 12-months high at 100.38 in mid-March. For a stretch of five sessions in mid-March the index remained near 100, before falling back when the Fed opted to leave short-term rates unchanged. Over the last year of trading, the index has spiked nearly 14%.

Dollar-denominated commodities such as gold become less expensive for foreign purchasers when the dollar depreciates. A rate hike is also viewed as bearish for the precious metal, which struggles to compete with high-yield bearing assets.

Silver for December delivery fell 0.128 or 0.90% to 14.030 an ounce.

Copper for March delivery added 0.012 or 0.61% to 2.061 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.