FX.co ★ Gold Jumps On Expectations Of A Softer Fed Policy

Gold prices surged amidst expectations that the anticipated fall in inflation would persuade the Fed to be softer on its inflation combat as well as monetary policy.

Consumer Price Inflation in the U.S is seen falling to 8.1 percent in August versus 8.5 percent in the month of July. The inflation readings are due on Tuesday.

The Dollar's retreat also supported the rise in dollar denominated prices of the yellow metal. The Dollar Index which measures the Dollar against a basket of six currencies weakened around 0.77 percent to 108.17 amidst hopes that the expected fall in inflation in the U.S. would persuade the Fed to soften its monetary policy stance.

The softening in bond yields, which reduces the opportunity cost of holding non-yielding bullion, also supported the metal's surge.

Gold Futures for December settlement strengthened 11 points to trade at $1,739.70, up 0.64 percent on an overnight basis. Prices oscillated between $1,722.35 and $1,744.85.