Gold falls despite easing expectation of U.S. rate hike

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Monday as traders looked to comments from Federal Reserve officials for further clues on the timing of a U.S. interest-rate increase.

The most active gold contract for December delivery fell 8.9 U.S. dollars, or 0.67 percent, to settle at 1,325.6 dollars per ounce.

U.S. interest rate futures prices rose, diminishing the implied probability of a rate hike by the U.S. central bank next week, after Fed Governor Lael Brainard warned against a rush to raise interest rates.

Brainard, minutes before the settlement for gold futures, struck a dovish tone, saying that the central bank needed to be prudent in considering future rate rises.

Traders will now have scrutinize the lineup U.S. economic data due this week, which include industrial production and the Consumer Price Index, for further clues on the timing of an interest-rate increase.

Brainard's comments came on the same day that Minneapolis Fed President Neel Kashkari said low inflation means there is no pressure to aggressively raise rates, while Atlanta Fed President Dennis Lockhart said current economic conditions warrant a "serious discussion" of whether to raise rates next week.

The market has been eyeing the divergence between U.S. monetary policy direction, which is headed higher, and the policy tilt elsewhere, including in Europe and Japan. The divergence remains a key driver in metals and foreign-exchange trading.

The Fed will hold its next policy meeting on Sept. 20-21.

Silver for December delivery dropped 36.8 cents, or 1.9 percent, to close at 19 dollars per ounce. Platinum for October delivery fell 24.6 dollars, or 2.3 percent, to close at 1,042.9 dollars per ounce. Endit