Gold traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,396.40 a troy ounce during U.S. morning hours, up 0.05%. The December contract settled up 1.8% at USD1,395.80 a troy ounce on Friday.
Futures held in a range between USD1,391.10 a troy ounce, the daily low and a session high of USD1,406.50 a troy ounce, the strongest level since June 7.
Gold futures were likely to find support at USD1,351.90 a troy ounce, the low from August 20 and resistance at USD1,417.45, the high from June 7.
The Commerce Department said durable goods orders dropped 7.3% in July, worse than expectations for a 4% decline. It was the largest decline since August 2012.
Core durable goods orders, excluding volatile transportation items, fell 0.6% last month, defying expectations for a 0.5% increase.
Orders for core capital goods, a key barometer of private-sector business investment, fell 3.3% in July, confounding expectations for a 0.5% gain.
Shipments of core capital goods, a category used to calculate quarterly economic growth, declined 1.5% last month, compared to expectations for a 0.3% increase.
The data came after a report on Friday showed that U.S. new home sales fell by a larger-than-forecast 13.4% in July, the largest decline in more than three years.
The weak data fuelled speculation over whether the Fed will start to scale back its USD85 billion-a-month asset purchase program in September.
The central bank is scheduled to meet September 17-18 to review the economy and assess policy.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.
The precious metal has rebounded nearly 16% since hitting a 34-month low of USD1,180.15 a troy ounce on June 28.
Despite recent gains, the precious metal is still on track to post a loss of approximately 17% on the year amid concerns the Fed will start to unwind its stimulus program by the year's end.
An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies.
Elsewhere on the Comex, silver for December delivery rallied 1.35% to trade at USD24.09 a troy ounce, the strongest level since May 6.
Silver’s gains accelerated after prices broke above key resistance levels close to the USD24-level, triggering a flurry of automatic buy orders amid bullish chart signals.
Silver prices are up almost 25% since hitting a three-year low of USD18.19 on June 28, placing it firmly in bull-market territory.
Meanwhile, copper for December delivery rose 0.55% to trade at USD3.374 a pound, the highest since June 5.