Investing.com -- Gold surged on Monday to approach $1,100 an ounce before falling back in U.S. afternoon trading, amid heavy trading in the safe haven asset following Friday's terrorist attacks in Paris.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,083.50 and $1,097.40 before settling at $1,084.20, up 3.50 or 0.32% on the session. At one point on Monday morning, gold reached its highest level since November 6 when it traded near $1,110 an ounce. Last Friday, the precious metal closed the week at near five-year lows, hours before a host of shootings and suicide bombings in Paris claimed the lives of at least 132 people and wounded more than 350 others. On Sunday, France launched a series of airstrikes against the Islamic State in Syria, which claimed responsibility for the attacks one day earlier.
After peaking above $1,180 in mid-October, gold futures have lost approximately 9% in value over the last month of trading. Over the next several weeks, gold could be further restrained by the prospect of an interest rate hike by the Federal Reserve when the U.S. central bank meets next on Dec. 15-16.
While six members of the Federal Open Market Committee offered diverging comments about inflation and the state of the U.S. economy last Thursday, the members still provided little clarity on the likelihood of an interest rate hike next month. When Fed chair Janet Yellen testified in front of the House Financial Services Committee on Nov. 4, she said the December meeting will be considered "live" for a rate hike decision if the Fed sees continued improvement in the economy and labor market. Then, last Thursday, Fed vice chair Stanley Fischer reiterated that he believes long-term inflation will move back toward the Fed's long-term goal of 2%, as transitory effects from a strong dollar and low energy prices continue to recede.
Nearly a decade has passed since the FOMC last raised its benchmark Federal Funds Rate. Short-term interest rates have remained at their current near-zero range for nearly seven years since the height of the Financial Crisis.
An interest rate hike is viewed as bearish for gold which is not attached to interest rates and struggles to compete with high-yield bearing assets.
The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, jumped more than 0.45% on Monday to an intraday high of 99.40. In U.S. afternoon trading, the index approached last week's highs when it surged to its strongest level in seven months.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for December delivery rose by 0.016 or 0.11% to 14.220 an ounce.
Copper for December delivery fell to fresh six-year lows at 2.107 settling at 2.115, down 0.053 or 2.42% on the session.