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Dec 23 Reuters Gold extended gains on Monday after a softerthanexpected U.S. inflation reading revived hopes for further monetary policy easing by the Federal Reserve in the coming year.

Spot gold gained 0.4 to 2,631.89 per ounce by 0734 GMT, rising for a third straight session after bullion prices hit their lowest since Nov. 18 on Wednesday on a hawkish Fed.

U.S. gold futures eased 0.1 to 2,645.80.

We are entering the holiday mode and gold39;s mainly been helped by shortcovering, which started on Friday itself and there is some technical support as well, said Ajay Kedia, director at Kedia Commodities, Mumbai.

Gold prices gained 1 on Friday on a softer U.S. dollar and Treasury yields after data indicated a slowdown in inflation.

The report showed monthly inflation slowed in November after little improvement in recent months. The personal consumption expenditures PCE price index, the Fed39;s preferred inflation gauge, rose 0.1 last month after an unrevised 0.2 gain in October.

In the 12 months to November, the PCE index advanced 2.4, compared with a 2.3 increase in the year to October. However, it remained below the expected 2.50 rise.

San Francisco Fed President Mary Daly and two other Fed policymakers said they felt the central bank would likely resume easing next year but signalled they…