Mubasher: Gold prices rose on Monday as the US dollar retreated from around 18-month highs, boosting appetite for the precious metal among holders of other currencies.

This also came as investors focused to the US Federal Reserve meeting this week, looking for clues on interest rate curve next year.

By 11:33 am GMT, spot gold went up 0.09% to $1,240.16 per ounce, while US gold futures rose 0.18% to 1,243.60 per ounce.

Gold prices hit a five-month high of $1,250.55 per ounce last week, but lost some ground as the US dollar strengthened.

The US dollar index, a tracker of the greenback against a basket of six major rivals, went down 0.24% to 97.2070, after rising a nearly 18-month peak in the prior session.

Investor focus would be directed to how many times the rates would be increased in next year, as investors have priced in a rate hike by the Fed at the Federal Open Market Committee (FOMC) meeting on 18-19 December, according to analysts.

“The market is gearing up for price-friendly news this week from the FOMC and later, from China's annual Central Economic Work Conference,” Saxo Bank analyst Ole Hansen told Thomson Reuters.

Speculators switched to a net long position in the precious metal of 10,252 contracts, adding 11,791 contracts in the week ended 11 December, the US Commodity Futures Trading Commission (CFTC) said.

“Shifting expectations about US monetary policy should remain a major source of volatility for gold, but headwinds from the interest-rate cycle should soften as the year progresses,” Julius Baer analysts said.

“That said, sustained strength of the US dollar remains the key risk for gold also next year,” they added.