Investing.com -- Gold futures rallied on Monday experiencing their highest one-day gains in more than a month, as investors covered shorts following one of the most severe routs over the last five years.
On the Comex division of the New York Mercantile Exchange, gold for December delivery rose more than $15 an ounce to move above $1,104 before paring some of the gains in U.S. trading following the release of promising durable goods data. Gold futures traded between a low of $1,088.40 and a high of $1,104.90, before settling at 1,097.30, up 11.30 or 1.04%.
Gold likely gained support at $1,073.70, the low from July 24 and was met with resistance at $1,133.80, the high from July 20.
Last week, gold plunged to a five-year low amid strong indications that the Federal Reserve will lift interest rates at some point this year. The Fed has kept short-term rates at its current level between zero and 0.2% since the end of the Financial Crisis in an effort to jumpstart the U.S. economy. It has also been nearly a decade since the Fed has raised its benchmark Federal Funds Rate.
Investors await the start of the Federal Open Market Committee's (FOMC) two-day meeting starting on Tuesday for further hints on the timing of lift-off. Earlier last week, Federal Reserve of St. Louis president James Bullard said there is a 50% chance the FOMC will raise rates during its September meeting.
Gold, which is not attached to dividends or interest rates, struggles to compete with high yield bearing assets in periods of rising rates.
On Monday, the U.S. Department of Commerce said total durable goods orders for the month of July rose by 3.4%, above expectations of a 3.1% gain. Durable goods received a boost from transportation, the subset in which aircraft orders are measured. Excluding transportation, durable goods rose 0.8% above consensus estimates of a 0.5% monthly gain.
Orders for Core durable goods, which also excludes airlines data, rose by 0.8% for July, above expectations for a 0.5% gain. Defying a long-term trend, total durable goods order increased on a monthly basis for only the third time since last July.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, plunged more than 0.9% to an intraday low of 96.47. Last week, the index surged to a three-month high at 98.31.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for September delivery gained 0.147 or 1.01% to 14.635 an ounce.
Copper for September delivery plummeted 0.029 or 1.29% to 2.354 a pound, as China's stock markets hit an eight-year low amid a decision by regulators to increase equity purchases by the State-backed China Securities Finance Corporation.
Last year, China accounted for almost 40% of world copper consumption. China is the world's largest consumer of copper and second-largest consumer of gold.