Gold bars Reuters

The US dollar weakened and precious metals declined as safe-haven demand was reduced after the Ukrainian President Petro Poroshenko said tensions in the country's eastern regions have been easing.

Traders said the prospects for higher US rates after the recent Fed statement continues to weigh on the dollar-denominated assets.

Silver dropped to a new four-year low while the other precious metals touched fresh multi-month lows on Monday.

"No matter what some people say, we see de-escalation now. The number of casualties is tens of times less than what we had before," Poroshenko said on the state-run UT-1 television station on 21 September, according to a Bloomberg report.

The country's bloodiest conflict since World War II has left more than 3,200 dead and 8,000 injured, according to the United Nations. Fighting in the Donetsk and Luhansk regions of Ukraine started after Russia annexed Crimea in March.

The US dollar index has dropped to 84.52 on Monday from the previous close of 84.80, where it was a more than four-year high.

Traders said the losses in the index on Monday could be on account of profit booking and with the prospects for stronger US recovery, the outlook for the metals will remain dim.

Gold fell to $1207.70, its lowest since early January, from the previous close of $1215.44. Silver dropped to a new four-year low of $17.31, down 2.8% on the day.

Platinum dropped to a new 9-month low of $1322.30 from Friday's close of $1331.75 and palladium fell 0.85% to a four-month low of $800.90.

Gold Technicals

The yellow metal is not far away from a crucial long-term support line of $1180, the 50% Fibonacci retracement of the 2005-2011 rally, and with a pattern of lower highs and steady lows over the past one year, a test of that line is likely in the near future.

The 50-period moving average on the monthly chart not yet turned downward but with the MACD clearly showing a bearish picture, prospects are that the metal will even close below that major support line, opening doors to $1000, the 61.8% level.

Further south, the levels to watch out for will be $865 and $680.

On the higher side, only a break above $1345, the 38.2% retracement, will revive the hope of a bounce back and if that happens, then the market will look for $1433 and $1522 before a retest of the 2011 record of $1920.

Gold monthly
Gold monthly IBTimes UK/FXStreet