Gold prices rise as dollar wilts, awaits US data

Key Points
  • Gold clawed back early losses on Monday as the dollar turned lower.
  • Global equities rose on Monday as the U.S. government played down fears of a trade war with China.

Gold prices rose on Monday as the U.S. dollar turned lower, but caution over the prospect of a potential escalation in the China-U.S. trade stand-off, upcoming U.S. data and U.S. Federal Reserve meeting minutes kept prices in a range.

Spot gold gained 0.37 percent at $1,337.78 per ounce at 4:06 p.m. ET. U.S. gold futures for June delivery settled up 0.38 percent at $1,341.20 per ounce.

The U.S. dollar index slipped against a basket of currencies and global equities rose as the U.S. government played down fears of a trade war with China, though traders remained cautious.

The two countries have threatened each other with tens of billions of dollars of tariffs, but officials in U.S. President Donald Trump's administration have stressed the tariffs are not yet in place and the dispute could be resolved through talks. Chinese President Xi Jinping is due to deliver a speech on Tuesday at the Boao Forum for Asia in Hainan province.

"If the speech shows that the trade war tensions are not de-escalated, we could see a big upside move for the gold price," Think Markets' chief market analyst Naeem Aslam said. "If we look at the price action for gold, we are consolidating," he added. "Support is at $1,307 and resistance is at $1,348. We need to break out of this zone, and that would set the tone for the new trend."

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Markets are also looking ahead this week to minutes from the latest Federal Open Markets committee meeting and CPI data, anticipation keeping gold hemmed in a tight range, said Michael Matousek, head trader at U.S. Global Investors.

"Traders are not making any big today moves until they get more confirmation on the direction of rates or inflation," Matousek said. Higher interest rates tend to make gold less attractive since it does not bear interest.

Silver gained .87 percent at $16.49 an ounce, while platinum increased 2.27 percent at $933.20. Palladium rose 3.05 percent at $928 an ounce.

The autocatalyst metal had fallen for the past 11 sessions, hitting its lowest since mid-August at $895.47 on Friday. It is now down more than a fifth from the record high reached in January.

"The near 20 percent correction in palladium prices signals a possible bear market," ScotiaMocatta said in a monthly note. The correction is not surprising given the sharp price gains of recent years, it said, adding, "Palladium's strong fundamentals remain in place, so we would expect dip-buying before too long."