Gold snapped the longest slump in three weeks as the dollar weakened, boosting the appeal of the metal as an alternative investment.
The Bloomberg Dollar Spot Index fell, ending the longest rally since January, as traders awaited the Federal Reserve’s decision on whether to raise interest rates for the first time in almost a decade. Policy makers meet this week, and traders put the odds of a rate rise by December at 36 percent. Higher rates curb the appeal of gold because it doesn’t offer yields or interest.
Gold is heading for its biggest monthly gain since January as signs of uneven U.S. growth and faltering expansions abroad spur speculation that the Fed will wait for more assurance that the economy can withstand tighter monetary policy. Bullion extended gains after a government report Monday showed purchases of new U.S. homes slumped in September to a 10-month low.
Gold futures for December delivery rose 0.3 percent to settle at $1,166.20 an ounce at 1:50 p.m. on the Comex in New York, ending three straight declines in the longest slump since Oct. 1. Trading on Monday was 38 percent below the 100-day average for this time, according to data compiled by Bloomberg.
Silver futures for December delivery gained 0.5 percent to $15.905 an ounce on the Comex. On the New York Mercantile Exchange, palladium futures for December delivery dropped 1.4 percent to $683.90 an ounce, while platinum futures for January delivery slid 0.4 percent to $997.50 an ounce.