Gold rises after downbeat U.S. data; gains capped as "outside market" forces weigh

On Monday gold saw a rise after the release of disappointing U.S. personal spending data which pressured the U.S. dollar index. Separately, the rumors were swirling in the markets that the Greece and its creditors have reached a deal, which, however, have not been confirmed.

Meanwhile, gains will likely be limited as there are "outside market" effects which weigh on the yellow metal.

August Comex gold futures were last up $11.10 an ounce at $1,201.30.

The U.S. Commerce Department said on Monday that personal spending was flat in April, compared to expectations for a gain of 0.2% and following an increase of 0.5% in March.

Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.

Personal income rose by 0.4% in April, above forecasts for a 0.3% increase and after holding flat in March, the report said.

The core PCE price index climbed 0.1% in April, below expectations for 0.2% and after rising 0.1% in March. The core PCE price index rose at an annualized rate of 1.2%, down from a 1.3% gain in March and compared to forecasts of 1.3%.

The U.S. central bank uses core PCE as a means to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.

Separately, there is currently speculation in the market place that Greece and its IMF/EU creditors have reached a debt-restructuring deal. However, as of this writing nothing has been confirmed. The news has pressured the greenback, which in turn has given gold a good lift.

On Monday the U.S. dollar index had been sharply higher in part due to safe-haven demand amid the Greek debt situation.

Crude oil prices were lower with the closely watched OPEC oil cartel meeting later in the week. Crude oil prices are in a down-trending channel on the daily bar chart.

Overnight, China got some mixed economic news Monday when its purchasing managers index for manufacturing came in at 50.2. A reading above 50.0 suggests growth in the sector.

In the European Union, the Markit manufacturing PMI came in at 52.2 in May from 52.0 in April.