BENGALURU – Gold prices hit a near two-week high on Monday as investors covered their short positions and the dollar slipped to its weakest since mid-June, while lingering U.S.-Sino trade tensions also supported the bullion.
Spot gold was up 0.5 percent at $1,260.41 an ounce, as of 0708 GMT, after touching its highest since June 26 at $1,262.06.
U.S. gold futures for August delivery were 0.5 percent higher at $1,261.70 an ounce.
Gold is pushing higher on the dollar’s weakness in Asian trading, said Tim Brown, trader at MKS PAMP Group, wrote in a note.
The dollar index, which measures the greenback against a basket of six major currencies, slipped to an over three week low after U.S. jobs data showed slower-than-expected wage growth. [FRX/]
The U.S. economy created more jobs than expected in June, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases this year.
A weak U.S. dollar makes greenback-denominated gold cheaper for holders of other currencies.
“Some short covering has likely ensued given certainties over the U.S.-Sino trade tensions on Friday. Still, the uptick in risk appetite into the week may be short-lived if more trade tariff threats are seen into the week ahead,” said OCBC analyst Barnabas Gan.
The United States and China exchanged the first salvos in what could become a protracted trade war on Friday, slapping tariffs on $34 billion worth of each others’ goods and giving no sign of willingness to start talks aimed at a reaching a truce.
President Donald Trump said on Thursday the United States may ultimately impose tariffs on more than a half-trillion dollars’ worth of Chinese goods.
“With the ongoing U.S.-Sino trade tensions, the resignation of David Davis will likely be a side-show, though it may raise some concerns amongst market-watchers depending on how the overall Brexit issue progresses,” OCBC’s Gan added.
Brexit Secretary Davis resigned because he was not willing to be “a reluctant conscript” to Prime Minister Theresa May’s plans to leave the European Union, delivering a blow to the British leader struggling to end divisions among her ministers.
Spot gold may rise into a range of $1,268-$1,277 per ounce, as it has cleared a resistance at $1,257, Reuters technicals analyst Wang Tao said. [TECH/C]
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15 percent to 802.24 tonnes on Friday. [GOL/ETF]
Among other precious metals, silver rose 0.7 percent at $16.11 an ounce and palladium was 0.6 percent higher at $958.22 an ounce. Both the metals hit their highest since June 27, during the session.
Platinum gained 1.7 percent to $854.70 per ounce, after earlier touching its highest since June 28 at $855.10 an ounce.
Reporting by Karen Rodrigues in Bengaluru; editing by Richard Pullin, Subhranshu Sahu and Gopakumar Warrier