Investing.com - Gold prices dropped on Monday after upbeat U.S. data and expectations for a bullish take on the economy from the Federal Reserve this week boosted demand for the dollar, which tends to trade inversely with the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were down 2.14% at $1,196.30, up from a session low of $1,195.40 and off a high of $1,224.80.
The February contract settled down 0.25% at $1,222.50 on Friday.
Futures were likely to find support at $1,186.40 a troy ounce, the low from Dec. 5, and resistance at $1,239.00, last Tuesday's high.
The Federal Reserve reported earlier that U.S. industrial production rose by 1.3% in November, beating expectations for a gain of 0.7%.
Industrial production for October was revised up to 0.1% from a previously reported decline of 0.1%.
The report added that the capacity utilization rate, a measure of how full firms are using their resources, rose to 80.1% last month from an upwardly revised 79.3% in October, beating market calls for an unchanged reading.
The data boosted demand for the dollar on expectations that the Federal Reserve will tighten policy next year.
The Federal Reserve is due to release its latest statement on interest rates and monetary policy on Wednesday, and expectations the statement will contain language describing a more robust U.S. economy spurred the dollar to strengthen, which sent gold prices dropping on Monday.
Elsewhere, a soft regional factory gauge failed to seriously cushion gold's losses.
The New York Federal Reserve’s index of manufacturing conditions fell unexpectedly in December, dropping into negative territory for the first time in almost two years, according to data released on Monday.
The Federal Reserve Bank of New York reported that its index of general business conditions came in at -3.6 this month, down from 10.16 in November. Analysts had expected the index to rise to 12.52.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
The Empire State manufacturing index is seen as an early forecast of the Institute for Supply Managements factory survey.
Elsewhere, silver for March delivery was down 4.04% at $16.368 a troy ounce, while copper futures for March delivery were down 2.38% at $2.864 a pound.