Gold futures ended higher on Monday, getting a boost as Treasury yields fell and the dollar weakened — lifting investor demand for the haven metal.
The U.S. Dollar Index is a ‘tad lower,’ Treasurys are rising—sending yields lower, and energy prices are lower, Michael Armbruster, managing partner at Altavest, told MarketWatch. ‘Those three conditions are more consistent with a risk-off day and a higher gold market.’
‘The best catalyst for gold to move higher would be a pullback in the S&P 500,’ he added.
Investors also continued to gauge prospects for a so-called phase one U.S.-China trade agreement.
Gold for December delivery GCZ19, +0.20% on Comex rose $3.40, or 0.2%, to settle at $1,471.90 an ounce after trading as low as $1.456.60 during the session. December silver SIZ19, +0.31% added 5.2 cents, or 0.3%, to $17 an ounce.
‘While it is extremely difficult to predict the next turn in the trade talks, news last week that China ended a ban on U.S. poultry imports and could be poised to purchase U.S. meat because of the raging hog disease could result in the agricultural purchases quota being met,’ said analysts at Zaner Metals, in a daily note. ‘Therefore, the bull camp has to be nervous on what the trade situation will bring this week with any further signs of progress potentially throwing December gold down to $1,450.’
Upbeat expectations around U.S.-China talks dented gold’s haven appeal Friday as U.S. stock indexes scored another round of record closes. Gold was under renewed pressure in early Monday dealings after Chinese state media outlet Xinhua described a weekend phone call between Vice Premier Liu He, the country’s top trade negotiator, and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin as ‘constructive.’
U.S. benchmark stock indexes were modestly higher as gold futures settled Monday, but had weakened a bit in earlier dealings after CNBC reported that Chinese officials remained troubled by comments by President Donald Trump indicating there would be no rollback of existing tariffs as part of an agreement.
The ICE U.S. Dollar Index DXY, -0.21% was also down by 0.3% in Monday trading, and the 10-year Treasury yield TMUBMUSD10Y, -1.13% lost 2.6 basis points to 1.8092%, boosting gold’s appeal for investors.
However, bearish analysts said gold still appears vulnerable amid a generally upbeat undertone around trade.
‘With Brexit and the trade war about to deliver potentially two big risk-on scenarios, gold selling could get ugly if we see a breach of last week’s low,’ said Edward Moya, senior market analyst at Oanda, in a note. ‘Since the end of the summer, gold was ready for a pullback, not the beginning of a bearish trend.’
In other metals trade, January platinum PLF20, +0.16% edged up by 0.06% to $895 an ounce, while December palladium PAZ19, +1.14% added 1.3% at $1,704.40 an ounce.
December copper HGZ19, -0.64% lost 0.7% to $2.62 a pound.