Gold prices settled modestly lower on Monday, weighed down by strength in U.S. bond yields but with losses capped by weakness in the dollar, as investors assessed a phase one trade deal between the U.S. and China.
“Last week, gold survived a wrath of market optimism that stemmed from the phase one trade deal and the outcome of the U.K. general election,” said Edward Moya, senior market analyst at Oanda.
For now, gold is “trading on dollar moves and will likely see a slight pause in following every trade headline,” he said in a market update. “While, we could see safe-haven demand return if markets are disappointed with the details of last week’s trade deal, gold could continue to grind higher if the dollar pushes lower.”
Gold for February delivery on Comex GCG20, -0.06% fell by 70 cents, or 0.05%, to settle at $1,480.50 an ounce after trading between a low of $1,477.40 and a high of $1,484.50. March silver SIH20, +0.49% added 10. cents, or 0.6%, at $17.113 an ounce.
President Donald Trump and Chinese officials on Friday announced an agreement on a preliminary U.S.-China trade pact. Gold gained ground in Friday’s session, however, boosted by a weaker U.S. dollar and a fall in Treasury yields. A weaker dollar makes commodities priced in the currency to cheaper to users of other currencies, while lower yields decrease the opportunity cost of holding nonyielding assets.
In Monday dealings, the ICE U.S. Dollar Index DXY, -0.14% edged down by 0.1% to 97.034 as gold futures settled. The 10-year Treasury note yield TMUBMUSD10Y, +3.62%, however, rose 6.7 basis points to 1.8854%, following the stock markets higher amid positive economic reports from China.
In other metals trading, March palladium PAH20, +3.20% rose 3.8% to $1,963.60 an ounce, while January platinum PLF20, +0.38% gained 0.3% to $931.30 an ounce.
March copper HGH20, +1.04% climbed by 1.1% to $2.8115 a pound.