Gold futures settled higher Monday to recoup some of what they lost in the previous session, as investors set their sights on the crucial Federal Reserve decision on interest rates due out later this week.

As far as the Federal Reserve is concerned, if the central bank sends out a dovish signal on Thursday, this may help to boost stocks and undermine the dollar. Gold may benefit as lower rates for longer would decrease the relative opportunity cost for holding the metal,” said Fawad Razaqzada, analyst at Forex.com, in a Monday research note.

Investors appear divided on the likelihood of a rate increase the first since 2006 but gold is finding some support from traders who view the probability of the Fed ending its ultraloose monetary policy this month as low.

Low rates are beneficial to gold, which doesn’t bear interest. Looser monetary policy for longer may keep the value of the dollar in check, offering dollar-denominated gold buyers reason to be bullish because a weaker buck makes the metal less expensive to buyers in other currencies.

Against this backdrop, gold for December delivery added $4.40, or 0.4%, to settle at $1,107.70 an ounce on Comex, after capping its third straight weekly loss Friday. Prices lost 0.5% in the previous session.

In other metals, December silver fell 14.2 cents, or 1%, to $14.363 an ounce. High-grade copper for December delivery lost 4.8 cents, or 2%, to end at $2.406 a pound.

October platinum settled down $9.50 cents, or 1%, to $955.40 an ounce, while December palladium lost $3.20, or 0.5%, to $587.80 an ounce.

Source : MarketWatch