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Gold futures rose Monday for the first time in three sessions amid speculation that the precious metal's prices may drop to a two-year low as deflation moves to curb the bullions investment appeal.

Gold for December delivery gained $8.60, or 1.2 percent, to end $726.80 an ounce on the Comex division of the New York Mercantile Exchange. The contract hit an intraday high of $739.50 a barrel.

The benchmark future lost 18 percent in October, its biggest monthly percentage decline since February 1983, according to Comex data.

The metal may drop to $600 by yearend for the first time since 2006, said Joel Crane, a Deutsche Bank AG strategist in New York.

"Gold is not considered a safe haven because investors are viewing it as part of the commodity class,'' Crane said in an interview with Bloomberg.

"Commodity is a bad word right now. Through this whole credit crisis mess, cash has been king.''