Investing.com - Gold futures held near an eight-month low on Monday, after the New York Federal Reserve’s index of manufacturing conditions improved at the fastest rate in more than four years in September.
On the Comex division of the New York Mercantile Exchange, gold for December delivery fell to a daily low of $1,226.40 a troy ounce, a level not seen since January 9.
Futures bounced back to last trade at $1,235.60 during U.S. morning hours, up $4.10, or 0.33%.
Gold was likely to find support at $1,218.60, the low from January 8 and resistance at $1,251.00, the high from September 11.
Also on the Comex, silver for December delivery inched up 1.7 cents, or 0.09%, to trade at $18.62 a troy ounce.
The Federal Reserve Bank of New York said that its general business conditions index increased to 27.5 this month from a reading of 14.7 in August. Analysts had expected the index to rise to 16.0 in September.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
The upbeat data added to speculation the Federal Reserve may signal an early interest rate increase at this week's policy meeting.
The dollar remained well bid amid speculation Fed officials could adopt more hawkish language, possibly by omitting mention of its commitment to keep rates low for a "considerable time".
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.
Gold costs money to store and struggles to compete yield-bearing assets when interest rates are on the rise.
Elsewhere in metals trading, copper for December delivery lost 2.5 cents, or 0.8%, to trade at $3.082 a pound after data showed that China's factory output grew at the weakest pace in nearly six years in August, adding to concerns over a slowdown in the world’s second largest economy.
Data released on Saturday 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 9.0% 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.
China is the world's largest copper consumer, accounting for nearly 40% of global demand.