Gold steady on weaker dollar, uncertainty over Fed


Gold steadied on Monday, after a three-day losing streak as the dollar's ascent paused and uncertainty persisted over the timing of the first U.S. Federal Reserve rate increase in a decade.

Spot gold was down 0.01 percent at $1,163.70 an ounce, off the session high at $1,169.20. The metal dropped on Friday to $1,158.77, its lowest since Oct. 13, when the dollar soared to its highest level in more than two months.

U.S. gold futures for December delivery settled up 0.3 percent at $1,166.20 an ounce.

On Friday, gold turned negative after rising 1 percent after China's surprise interest rate cut as investors bet the U.S. central bank would be compelled to delay a rate rise given the fragility of the global economy.

Data on Monday showed that new U.S. single-family home sales fell to near a one-year low in September, pressuring the U.S. dollar versus a basket of major currencies, though a jump in prices suggested that housing remained on solid ground.

"I do think we're going to make a crack at $1,200 because the U.S. data's getting worse (and) this Chinese rate hike was big," said Dan Izzo, vice-president, Global Marketing Strategy Group for brokerage RJO'Brien in New York.

"I just don't see a scenario where they can raise rates in December at this point if China's going through what they're going through."

Investors awaited a two-day Fed policy meeting ending on Wednesday.

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Although the Fed is not expected to raise rates at this month's meeting, the market will be watching for clues on its take on the global economy and whether a hike could come in December.

"We have gone now from thinking it was going to be September to being sometime next year," Citi strategist David Wilson said.

"I still think the medium trend is going to be downwards but we could get short-term support as people position ahead of what does or doesn't happen in the meeting this week."

Hedge funds and money managers raised their bullish bets in COMEX gold and silver in the week to Oct. 20, data showed on Friday, with the net long position at their highest since February.

Most industrial precious metals fell, with platinum down 0.5 percent at $994 an ounce and palladium falling 1 percent to $681 an ounce. Silver followed gold's upside, rising 0.2 percent to $15.83 an ounce.