Gold prices rose on Monday as global stocks fell on data showing China exports unexpectedly fell, pointing to further weakening in the world's second-largest economy and prompting investors to seek safety in the precious metal.
Spot gold rose 0.3 percent to $1,291.39 per ounce at 1:48 p.m. ET while U.S. gold futures settled $1.80 higher at
$1,291.30 per ounce.
"The fact that U.S. stocks have opened lower and weak macro numbers from China on the trade figures today has been helpful for gold," INTL FCStone analyst Edward Meir said.
The faltering stock markets and weak Chinese data imply economic conditions could worsen during the course of the year, he added.
Chinese exports fell by their most in two years in December, alongside a significant contraction in imports, data showed on Monday, hitting stock markets and highlighting fears of a sharper slowdown in global growth.
Gold, which is often used as a hedge against economic and political uncertainty, has also been helped by concerns surrounding an impending vote on Britain's exit from the European Union and a prolonged partial government shutdown in the United States.
"If the partial government shutdown continues, it will eventually weigh heavily on equity prices, sending more investors over to the gold and bond markets," Walter Pehowich, executive vice-president of investment services at Dillon Gage Metals, said in a note.
Spot gold has gained more than 11 percent since hitting a 1-1/2-year low in mid-August at $1,159.96.
Extension of the shutdown and the subsequent slowdown in the United States economy "contributes to the fact that the U.S. Federal Reserve will likely not raise rates at all this year," INTL's Meir said.
The metal was propped up last week by Fed Chairman Jerome Powell, who reaffirmed that the central bank could remain patient on monetary policy, downplaying suggestions that interest rates would be raised twice more this year.
Investors will now be eyeing developments on trade between the United States and China, with U.S. officials expecting a visit by Beijing's top trade negotiator this month after mid-level discussions between the two countries ended on a seemingly positive note.
Among other precious metals, palladium rose 0.33 percent to $1,322.35 an ounce, after having hit $1,341.70 earlier in the session. The metal was trading just below the all-time high of $1,342.43 touched last week, and nearly $30 above gold.
"Palladium has continued its march higher but $1,350/oz appears to be a pretty significant technical level," analysts at JP Morgan said in a note.
"Despite continued deficits, a potential recession on the horizon still keeps us cautious on prices for the second half of 2019 given that the metal lost more than 60 percent in each of the two previous recessions."