Gold up on continued technical bounce

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Monday as traders continued to react to changing technical trading information in the wake of last week's Fed rate hike.

The most active gold contract for February delivery rose 5.3 U.S. dollars, or 0.47 percent, to settle at 1,142.70 dollars per ounce.

The focus of the day was a continued small but consistent rebound in the precious metal's price after falling sharply after the U.S. central bank rate hike.

Analysts note that when a sharp drop normally occurs, a slight uptick normally happens afterwards as is normal with the laws of supply and demand. Traders often call this a "dead cat bounce" where although the precious metal has a poor long-term outlook, it becomes a good purchase in the short-term.

Gold was given support as the Purchasing Managers Index (PMI) Services Flash report released by U.K.-based Markit Economics showed U.S. services falling by more than one point to a 53.4 level. Analysts note that although the previous PMI report showed exceptional strength, this report did not, and could drive investors to the precious metal' s safe haven properties in the short-term, despite the long-term outlook for gold being poor.

The precious metal was prevented from rising further as the U.S. Dollar Index rose by 0.37 percent to 103.16 as of 1830 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

U.S. equities mostly followed the U.S. dollar as well, with the U.S. Dow Jones Industrial Average rose by 44 points, or 0.23 percent as of 1830 GMT. Analysts note that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when U.S. equities post gains.

Traders are looking to the week ahead for the existing home sales report on Wednesday, durable goods, gross domestic product, and weekly jobless claims on Thursday, and finally the new home sales and consumer sentiment reports on Friday.

Silver for March delivery fell 12.6 cents, or 0.78 percent, to close at 16.089 dollars per ounce.

Platinum for January delivery dropped 16.8 dollars, or 1.80 percent, to close at 917.30 dollars per ounce. Endit