By Marcy Nicholson and Pratima Desai
NEW YORK/LONDON (Reuters) - Gold hit its highest in almost seven weeks on Monday, boosted by a struggling dollar and U.S. economic data that cast doubt on whether the Federal Reserve will raise rates again this year.
Spot gold was down 0.1 percent at $1,267.4 an ounce by 2:00 p.m. EDT (1800 GMT), after rising to its highest since June 14 at $1,270.98. It is on course for a 2.1 percent rise this month, its strongest monthly performance since February. U.S. gold futures settled down 0.1 percent at $1,266.60.
"Dollar weakness is driving the gold price. It's not just against the euro, it's against most major currencies," said Commerzbank analyst Eugen Weinberg. "U.S. politics is a mess and U.S. data has not been inspiring."
The U.S. currency fell to its lowest in nearly 16 months against a basket of currencies, making dollar-denominated gold cheaper for holders of other currencies, which could mean stronger demand. [FRX/]
"Rising geopolitical tensions and political uncertainty, weak U.S. macro data and a weaker U.S. dollar have buoyed gold prices," said Standard Chartered in a note.
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"Recovering investor interest has overshadowed the poor physical market, for now."
Fed Chairman Stanley Fischer said uncertainty over the outlook for U.S. healthcare, regulation, taxes and trade could prompt firms to delay projects until the policy environment is clearer.
Analysts said decelerating wage growth and subdued inflation have weakened the case for another rate rise this year. The Fed has raised rates twice this year.
"We think that there is more upside on gold," said INTL FCStone analyst Edward Meir in a note. "A combination of a weaker dollar and falling U.S. bond yields should propel the precious metal higher, with North Korea being a wild card."
However, weak physical demand is expected to limit gold's gains. Gold prices in India last week recorded the biggest discount in seven months as a rebound in prices curtailed retail demand, while lower premiums in other Asian centres failed to lure customers amid a seasonal slowdown. [GOL/AS]
Elsewhere, silver gained 0.8 percent to $16.79 an ounce, after rising to $16.88, the highest since June 29.
Palladium rose 1.1 percent to $886.30, after tapping a seven-week high at $897.05. Platinum climbed 1 percent to $938.30, after rising to $943.70, the highest since June 14. It made its first monthly gain since February.
Demand for platinum used in autocatalysts could come under pressure due to a push towards electric cars powered by rechargeable batteries and away from vehicles with internal combustion engines that use diesel.
(Additional reporting by Nithin Prasad in Bengaluru; Editing by Bernadette Baum)