Gold flattens as focus turns to US presidential debate

Gold steadied on Monday, after a retreat in the dollar helped it build on last week's gains but moves were muted with markets awaiting a US presidential debate for pointers as to the outcome of November's election.

The precious metal rose more than 2 per cent last week, its biggest weekly gain in nearly two months, thanks chiefly to the US Federal Reserve's cautious tone on interest rates after its policy meeting on Wednesday.

Spot gold was at $1,337.40 an ounce by 2:57 p.m. EDT (1857 GMT), up 0.01 per cent, while US gold futures for December delivery settled up 0.2 per cent at $1,344.10 per ounce.

"The dollar is a bit weaker since this morning, but also the oil price is much higher and this is contributing to some uptrends in commodities in general," Commerzbank analyst Eugen Weinberg said, when gold prices were firm.

Oil rallied on Monday as the world's largest producers gathered in Algeria to discuss ways to support the market.

Stock prices around the world fell ahead of the first US presidential debate between Democrat Hillary Clinton and Republican Donald Trump.

The first face-off between Trump and Clinton will take place at 0100 GMT on Tuesday, with investors looking for clues about who will win the race to lead the world's biggest economy.

The presidential debate is likely to be "very interesting" for gold, Weinberg said. "(More support) for Trump after the debate is likely to add to support for gold."

Rising support for Trump could increase uncertainty, and therefore interest in gold as a haven from risk, analysts said.

Looking to economic data, new US single-family home sales posted their biggest decline in nearly a year in August after soaring to nine-year highs the month before, with analysts saying the trend in sales remains positive.

"In the mosaic of economic data, you're in this zone of modest improvement in the housing market. Not too hot, not too cold," said Rob Haworth, senior investment strategist for US Bank Wealth management in Seattle.

"I think that's how the market is interpreting this housing data."

Data late Friday showed that hedge funds and money managers cut their net long position in COMEX gold for the second straight week in the seven days to September 20.

Weakness in risk appetite weighed on the more industrial precious metals, with platinum down 1.3 per cent at $1,037.40 and palladium 1.2 per cent lower at $691.47.

Silver was down 1.4 per cent at $19.38 an ounce.