Spot gold fell as much as 4% to $4,111 an ounce on Monday, its lowest since August 5, as the 10-year U.S. Treasury yield reached its highest level since June 2007 before retreating. Rising Treasury yields and market expectations of a roughly 70% chance of a second consecutive Federal Reserve rate hike in October are weighing on the non-yielding metal by making interest-bearing assets more attractive. Positioning has weakened, with money managers' net-long gold holdings reaching their lowest level since late July and gold-backed exchange-traded funds recording 1.6 metric tons of outflows last week. Demand in China also softened ahead of the October 1 to 7 holiday, while Indian buying ahead of Diwali and the wedding season could provide support. Historically high prices and a relatively weak monsoon may nevertheless limit Indian jewellery demand, particularly among farmers.