Investing.com - Gold prices rose on Monday after former U.S. Treasury Secretary Larry Summers dropped out of the race to replace Ben Bernanke as head of the Federal Reserve, though sentiments U.S. monetary stimulus measures will scale back soon capped gains.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,318.10 during U.S. afternoon hours, up 0.73%.
Gold prices hit a session low of USD1,307.40 a troy ounce and high of USD1,334.60 a troy ounce.
Gold futures were likely to find support at USD1,304.80 a troy ounce, Friday's low, and resistance at USD1,393.80, the high from Sept. 8.
The December contract settled down 1.65% at USD1,308.60 a troy ounce on Friday.
Summers, viewed by many as President Barack Obama's first choice as head of the Federal Reserve, bowed out of the race over the weekend, and was perceived as being most likely to wind down dollar-weakening economic stimulus measures.
The other leading candidate, noted dove and current Fed Vice Chair Janet Yellen, is viewed by many as willing to keep stimulus measures in play for as long as possible in order to lower unemployment rates.
Gold has been the beneficiary over the Fed's three rounds of bond purchases since the recession, which have weakened the dollar to spur recovery.
Gold and the dollar tend to trade inversely with one another.
On Tuesday, the Fed will open a two-day monetary policy meeting, with many expecting the U.S. central bank to announce plans to begin tapering its current USD85 billion monthly bond-buying program, which capped gains though the yellow metal still remained higher as most expect the Fed to wind down its stimulus programs very gradually.
Elsewhere, the Federal Reserve Bank of New York reported earlier that its Empire State manufacturing index fell to a four-month low of 6.29 in September from 8.24 in August, defying analysts' calls for the index to rise to 9.20.
Separately, the Federal Reserve reported that U.S. industrial production advanced 0.4% in August after having been unchanged in July, in line with expectations.
The dollar continued to come under pressure after Friday data revealed that the Thomson Reuters/University of Michigan preliminary U.S. consumer sentiment index fell to a six-month low of 76.8 in September from 82.1 in August, worse than expectations for a decline to 82.0, which further supported gold.
Also on Friday, official data showed that U.S. retail sales rose 0.2% in August, missing expectations for a 0.4% rise.
Core retail sales, excluding automobiles, rose 0.1% last month, short of expectations for a 0.3% gain.
Elsewhere on the Comex, silver for December delivery was up 1.40% at USD20.023 a troy ounce, while copper for December delivery was up 0.62% and trading at USD3.223 a pound.
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