Gold fell around 0.8 percent on Monday, heading towards $920 per ounce, with dollar strength against a basket of major currencies sapping the appeal of bullion and other commodities priced in the U.S. unit.

Spot gold dropped to $925.60 an ounce at 1207 GMT, having earlier hit a intraday low of $921.30. That compared with $933.80 quoted late on Friday in New York. The price was fixed or set in London earlier on Monday at $924.00.

The dollar gained at the expense of higher-yielders normally associated with risk seeking behaviour, reflecting investor concern about global growth prospects and jitters ahead of the U.S. Federal Reserve’s rate setting meeting — a factor that was seen supporting gold at the lower levels.

“This whole rebound in sentiment has run into concerns over the extent of real improvement in the economy,” Calyon analyst Robin Bhar said.

“I don’t really see too much more downward movement (in gold) from here, as physical demand will reappear at these levels.”

The Fed was not expected to adjust monetary policy at its meeting this week, but investors will keep a keen eye on its statement for clues on the economic outlook and progress of its debt buyback programme.

In early June, a weakening dollar and increasing demand for gold-backed funds helped bullion hit a three-month high of $989.80 an ounce. But the dollar has since pared its losses, dulling some of gold’s allure as an alternative investment.

Easing crude prices also helped diminish appetite for gold as a hedge against oil-induced inflationary concerns.

INVESTMENT TAILS OFF

In other metals, silver followed gold lower , falling to $13.83 from $14.19 late on Friday in New York. Platinum was bid at $1,188.50 per ounce , while palladium stood at $239 .

Gold’s three-week decline, partly due to selling related to the unwinding of long positions in U.S. gold futures, has discouraged fresh buying, traders said.

U.S. gold futures for August delivery fell 1 percent to $926.70 per ounce from Friday’s settlement on the COMEX division of the New York Mercantile Exchange.

A weekly report by the U.S. Commodity Futures Trading Commission showed noncommercial net long U.S. gold futures positions fell 7.5 percent to 175,543 lots in the week to June 16 from 189,674 lots the week before .

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust (GLD), said its holdings stood at 1,132.15 tonnes as of June 19, unchanged since June 5.

ETF Securities also said on Monday the amount of gold it holds to back its Gold Bullion Securities exchange-traded commodity fell around 45,000 ounces on June 19.

Investors are in a period of re-adjustment, analysts said, as earlier bets on riskier assets including global share markets  may been overdone in light of persistent global growth concerns.

“Anyone expecting a rapid v-shaped recovery is in for a bit of a disappointment,” said Simon Weeks, director, precious metals sales at Scotia Mocatta in London.

LONDON, June 22 (Reuters)