Gold up on US rate hike delay speculation

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Monday as traders were beginning to price in a potential delay in the US central bank's rate hike.

The most active gold contract for December delivery added $8.6, or 0.74 percent, to settle at $1,164.50 per ounce, Xinhua reported.

The precious metal rose on Monday as traders reacted to an increasing belief that the US Federal Reserve will not raise interest rates this year.

The CME Group Fedwatch tool shows an implied probability of a very small 8 percent increase in the US Federal Reserve's interest rate during its meeting scheduled for October 28.

The tool also shows an implied probability of a 37 percent rate hike for the meeting scheduled for December 16, while there is a much higher chance of a rate hike during the January 27, 2016 meeting, at 47 percent. According to the tool, there is a 39 percent chance of a 0.50 rate, and a 6.8 percent chance of a 0.75 rate.

An increase in the Fed's interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

The US Dollar Index, a measure of the dollar against a basket of major currencies, fell by 0.06 percent to 94.80 as of 1815 GMT.

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.

Silver for September delivery rose 4.6 cents, or 0.29 percent, to close at $15.864 per ounce, while platinum for October delivery added $14.5, or 1.48 percent, to close at $995.90 per ounce.