Metals Stocks: Gold Holds To Tight Range Ahead Of North Korea Summit, Expected Fed Rate Action

Gold futures held to a tight trading range on Monday, with an overall a wait-and-see mood taking hold ahead of the much-touted meeting over North Korea’s denuclearization and a bevy of major central bank gatherings in the coming week.

August gold GCQ8, +0.15%  tacked on 20 cents to $1,302.90 an ounce, holding between a low of $1,297.80 and high of $1,305.70. The metal had managed a modest weekly return of about 0.3% last week after challenging the closely watched $1,300 line.

“Market participants are already looking ahead,” said Carsten Fritsch, analyst at Commerzbank, in a note. “Tomorrow will see U.S. President Donald Trump and North Korean leader Kim Jong Un meet in Singapore. If agreement were to be reached there, geopolitical risks in the region would probably decrease, resulting in less demand for gold as a safe haven.”

Read: What time is the North Korea summit between Trump and Kim?

Also see: Trump will stand firm on denuclearization at North Korea summit, says Pompeo

“The meetings of the Federal Reserve and European Central Bank will play a more important role for gold, however,” Fritsch said. “While there is every likelihood of the Fed raising interest rates again, the ECB may announce that it will be ending its expansionary monetary policy.”

Global trade issues remained in the fore, though fresh direct market impact was so far limited, after weekend tensions between Trump and Canadian Prime Minister Justin Trudeau, with Trump withdrawing his support for the Group of Seven communiqué after Trudeau criticized U.S. tariffs on Canadian metals.

Hostilities between Trump and the leaders of two close allies—Canada and France—had intensified ahead of the G-7meeting, and Trump and administration trade officials continued the spat on Monday.

“The trade-related spat between the U.S. and Canada that is becoming more vitriolic underscores the fading hopes the U.S. and its major trading partners can avoid an escalation in trade sanctions against each other,” said Jim Wyckoff, senior analyst at Kitco.com.

“This matter could be a mixed bag for the gold market,” he said in a note. “From a safe-haven perspective, it’s bullish because of the tensions between the world’s largest economies. However, from a raw commodity perspective, it’s bearish because of the potential for reduced world trade in raw commodities.”

As for interest-rate policy, the key driver of currency and gold levels, the Federal Reserve is expected to raise interest rates after its two-day meeting that begins Tuesday. European Central Bank policy makers are expected to announce the timing of a reduction of its crisis-era asset-purchase initiative when it meets on Thursday.

Don’t miss: Investors brace for week packed with Fed, ECB and North Korean drama

Ahead of those events, the ICE U.S. Dollar Index DXY, -0.01% a measure of the dollar against a half-dozen major currencies, traded less than 0.1% lower. However, it has climbed by nearly 4% so far this quarter, helping to put pressure on dollar-denominated gold prices, which have lost roughly 2% for the quarter, according to FactSet Data.

Meanwhile, July silver SIN8, +1.19%  was trading up 1% at $16.915 an ounce. It logged a weekly rise of 1.8% as gold’s sister commodity, which also attracts industrial-use demand, handily outperformed its rival. July copper HGN8, -1.12%  traded at $3.274 a pound, down 0.8%, after logging a sharp weekly rise of 6.5%.

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July platinum PLN8, -0.10%  rose 0.3% to $908.10 an ounce. September palladium PAU8, +1.19%  rose 1.1% to $1,016.30 an ounce.

Among exchange-traded funds, SPDR Gold Shares GLD, +0.16%  added 0.1%. The iShares Silver Trust SLV, +0.94%  was up 0.8% and the VanEck Vectors Gold Miners ETF GDX, +0.47%  rose 0.2%.