WASHINGTON (dpa-AFX) - Despite a fairly strong dollar, gold futures settled higher on Monday, amid optimism the Federal Reserve will announce an interest rate cut after its policy meeting next week. Investors also awaited U.S. inflation readings to assess the likely quantum of interest rate cut by the Fed.
The dollar index, which climbed to 101.70 in the European session, pared some gains subsequently, and was last seen at 101.53, up 0.35% from the previous close.
Gold futures for September ended higher by $8.30 or about 0.33% at 2,501.80 an ounce.
Silver futures for September ended up by $0.483 or about 1.75% at $28.291 an ounce, while Copper futures for September climbed to $4.0770 per pound, gaining $0.0625.
U.S. reports on consumer and producer price inflation for August and the University of Michigan's consumer survey.
The U.S. Labor Department will release the consumer price index early Wednesday and the producer price index before Thursday's open. Tame readings could give policymakers ammo for making a 50-bps rate cut on Sept. 18.
Markets expect a 75% chance of a 25-basis point cut at the Fed's meeting next week, and a 25% chance of a 50 bp reduction, according to the CME FedWatch tool.
Responding to Friday's weak jobs data, U.S. Treasury Secretary Janet Yellen said that the U.S. economy remains strong and that recent months of cooler jobs data is a signal of a soft landing, not a recession.
Elsewhere in Europe, the governing council of the European Central Bank will meet on Thursday and it its widely expected that the board will reduce interest rates for the second time this year.
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