Gold settles higher as dollar falls off two-month high

Gold futures tilted higher in American trade as the dollar index plumbed September 27 lows, following earlier data from China, the world's largest metals consumer, and the US. 

As of 02:01 GMT, gold futures due in December rose 0.33% to $1,234.30 an ounce, while the dollar index shed 0.15% to 95.92 away from August 20 highs. 

Earlier Chinese data showed consumer prices rose 2.5% as expected, the fastest such pace in seven months. 

Producer prices rose 3.6 y/y, the slowest such pace in five months, and missing estimates of 3.7%. 

Earlier US data showed industrial output rose 0.3% in September, slowing down from 0.4%, while the Capacity Utilization Rate stood at 78.1%, same as before and below estimates of 78.2%. 

Gold futures rallied $30 last Thursday, marking the best performance this year, while scoring the second weekly profit in a row as traders flock to safe havens as global stocks tumbled last week. 

Wall Street shed 4% last week on concerns of surging treasury yields and expectations of an accelerated pace of policy tightening by the Federal Reserve, and economic slowdown around the world due to trade protectionism. 

US President Donald Trump recently renewed his criticism of the Federal Reserve's policy tightening, accusing them and the treasury department of making the most problems for America, even over the trade dispute with China. 

In a recent Pennsylvania rally, Trump said the Federal Reserve has gone "crazy" with its latest rate hikes, while noting that stocks are undergoing a normal correction after a succession of record highs. 

Otherwise, International Monetary Fund head Christine Lagarde expressed her support for China's moves to maintain the flexibility of its exchange rate, while noting the Fed's decisions shouldn't be considered "crazy". 

On Sunday, the People's Bank of China cut reserve requirements for Chinese banks for the fourth time this year amid attempts to ease policies and bolster spending. 

The IMF cut its forecasts for global growth for this year and the next for the first time in two years, with US and Chinese economies the most important downgrades alongside the euro zone due to rising trade protectionism. 

Otherwise, Gold holdings at SPDR Gold Trust, the world's largest gold-backed investment fund, rose 4.12 tonnes on Monday to a total of 748.76 tonnes, the highest since August 31, after prices marked the sixth monthly loss in a row in September, the longest such losing streak since late 1996.