Gold prices weaker in Asia with focus on Fed policies

Investing.com - Gold prices fell early in Asia on Monday as demand prospects waned with expectations that the U.S. Federal Reserve could raise interest rates within the first half of 2015.

On the Comex division of the New York Mercantile Exchange, gold for December traded at $1,228.60 a troy ounce, down 0.24%, after hitting a session low of $1,228.10 a troy ounce on Friday, a level not seen since Jan. 9.

Prices recovered on Friday to settle at $1,231.50, down $7.50, or 0.61%.

Upbeat U.S. economic data on Friday underlined optimism over the strength of the economy and fuelled expectations that the Federal Reserve will begin to raise rates sooner than previously thought.

In a preliminary report, the University of Michigan said its consumer sentiment index rose to a 14-month high of 84.6 this month, from a reading of 82.5 in August.

The data came after a government report showed that U.S. retail sales rose 0.6% last month, in line with expectations.

Expectations that the Fed is growing closer to raising interest rates continued to boost the U.S. dollar against the yen and the euro, with the Japanese and European central banks likely to stick to a looser monetary policy stance.

In the week ahead, investors will be focusing on the outcome of Wednesday’s Fed policy meeting. Fed Chair Janet Yellen was to hold a press conference following the meeting.

The central bank was expected to cut its asset purchase program by another $10 billion, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.

Silver for December delivery fell 0.14% to $18.583 a troy ounce.

Copper for December delivery slumped 0.80% to $3.080 a pound.

Data released over the weekend showed that industrial production in China rose at an annualized rate of 6.9% in August, missing estimates for a gain of 8.8% and slowing from an increase of 9% a month earlier.

Fixed asset investment, which tracks construction activity, rose 16.5% in the January-August period, below expectations for a gain of 16.9% and slowing from 17.0% in the January-July period.

The weaker than expected data underlined concerns about China's economy and sparked speculation policymakers in Beijing will have to introduce fresh stimulus to meet the government's 7.5% growth target.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.