Investing.com -- Gold futures jumped to near-three month highs on Monday amid a softer dollar, to extend gains from late last week as the Federal Reserve continues to weigh whether it will raise short-term raise before the end of the year.
Gold for December delivery traded in a broad range between $1,155.20 and $1,168.60 an ounce, before settling at $1,163.60, up 7.80 or 0.67% on the session. On Friday, gold gained more than 1%, as metal traders reacted to the release of dovish minutes from the Federal Open Market Committee's September meeting one session earlier. Fears of a recession in China and the global economy overall, according to the minutes, could spill over into the U.S. economy, significantly restraining inflationary growth. The FOMC is reluctant to hike short-term interest rates until long-term inflation moves toward its targeted goal of 2%.
Last month, the Fed downgraded long-term inflation projections due to headwinds from a stronger dollar, crashing energy prices and low wage growth. The FOMC now projects that long-term inflation will not reach 2% until the end of 2018.
An interest rate hike is viewed as bearish for gold, which is not attached to dividends or interest rates. Gold struggles to compete with high-yield bearing assets in rising rate environments.
Since surging by more than 2% on October 2, gold has now closed higher in five of the last seven sessions. The precious metal has fully recovered from the summer doldrums when it plunged to near-decade lows after suffering one of its longest losing streaks since 1996. Gold is up by approximately 6% since falling below $1,080 an ounce in late-July.
At the start of this week, a litany of Federal Reserve governors will offer their views of the state of the U.S. economy in a series of public appearances. Their comments could provide indications on whether the FOMC could raise its benchmark Federal Funds Rate during one of its final two meetings in the calendar year. The FOMC meets next on Oct. 27-28, before meeting for the final time this year on Dec. 15-16.
On Monday morning, Atlanta Fed president Dennis Lockhart indicated that the FOMC will have more economic data at its disposal in December to vote on policy normalization, as opposed to its meeting later this month. Last week, Lockhart said he will keep a close eye on U.S. consumer spending data as he weighs his decision.
Separately, Chicago Fed president Charles Evans said on Monday that he would prefer to wait until 2016 to raise rates, citing soft inflation data. On Monday after the close of trading, Fed governor Lael Brainard will discuss U.S. economic outlook at the National Association for Business Economics Annual Meetings in Washington. St. Louis Fed president James Bullard will also discuss the economy and monetary policy at the NABE conference on Tuesday morning.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell to an intraday low of 94.67 on Monday, its lowest level in three weeks. In U.S. afternoon trading, the index stood at 94.76, down 0.18% on the session.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Trading was light on Monday during the Columbus Day holiday in the U.S. even as markets remained open.
Silver for December delivery gained 0.047 or 0.30% to 15.865 an ounce.
Copper for December delivery inched up 0.001 or 0.03% to 2.415 a pound.