Gold Ends Higher, Snaps 5-Day Losing Streak

(RTTNews) - Gold futures snapped a five-day loss to end higher on Monday, mostly on bargain hunting after the precious metal shed a near three percent last week with speculations rife that the Federal Reserve may hike interest rates earlier than expected following a slew of positive economic data out of the U.S.

Weakness in global equity markets amid renewed concerns over the slowing pace of Chinese economic growth appear to be prompting investors to seek the safe haven of the yellow metal.

However, a stronger U.S. dollar amid speculation over a Fed rate hike is limiting gold's upside.

Gold for December delivery, the most actively traded contract, gained $3.60 or 0.3 percent to close at $1,235.10 an ounce on the Comex division of the New York Mercantile Exchange on Monday.

Gold for December delivery scaled an intraday high of $1,239.20 and a low of $1,226.30 an ounce.

On Friday, gold futures ended down $7.50 or 0.6 percent at $1,231.50 an ounce, extending losses to a fifth straight session. Gold futures shed 2.9 percent last week.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 788.40 tons on Monday, from a previous close of 788.72 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 84.22 on Monday, up from its previous close of 84.17 late Friday in North American trade. The dollar scaled a high of 84.41 intraday and a low of 84.15.

The euro trended lower against the dollar at $1.2945 on Monday, as compared to its previous close of $1.2973 late Friday in North American trade. The euro scaled a high of $1.2973 intraday and a low of $1.2910.

Bank of America Merrill Lynch on Friday forecast the first rate increase may occur in June 2015, three months ahead of its earlier projection.

According to data released by the National Bureau of Statistics over the weekend, industrial production in China rose 6.9 percent year-over-year in August following the 9 percent rise in July, with growth slowing for the second straight month and hitting its slowest pace in over 5 years.

Chinese retail sales expanded by a smaller than expected 11.9 percent year-over-year in August, slower than the 12.2 percent increase in July.

In economic news from the U.S., investors largely shrugged off a report from the Federal Reserve Bank of New York that showed business activity in the New York manufacturing sector to have expanded at a robust pace in September, lifting the headline business conditions index to 27.5, a near five-year high. Economists expected the index at 16.0.

With manufacturing output falling for the first time since January, the Federal Reserve report on U.S. industrial production showed an unexpected decline in August. Industrial production edged down 0.1 percent in August after inching up by a downwardly revised 0.2 percent in July. Economists expected production to climb by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the OECD projected 0.8 percent growth this year in euro area, down from the 1.2 percent expansion estimated in May. For 2015, growth is estimated at 1.1 percent. The Paris-based think tank recommended more monetary support for the euro area, stating that recent actions by the ECB though welcome, measures including quantitative easing are warranted.

It is widely expected that the U.S. Federal Reserve, which will conclude its two-day policy meeting this Wednesday, will further reduce the pace of its bond purchases. The focus is on what the Fed has to say about the outlook for interest rates.

Results of a couple of regional manufacturing surveys, reports on housing starts and homebuilder confidence and weekly jobless claims data are also awaited.

Among other data due this week are the Labor Department 's August producer prices report for final demand, the Commerce Department's current account data for the second quarter, and the Conference Board's leading economic indicators.