Gold futures settled back above $1,300 an ounce on Monday for the first time in over a week, as a slump in the dollar helped the haven metal to rebound from a loss last week, and investors turned cautious ahead of the launch of a new earnings season for American corporations.
“Naturally, a weaker U.S. dollar index is a tailwind for gold,” said Michael Armbruster, managing partner at Altavest.
The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, +0.02% was down 0.4%. A weaker dollar can boost the appeal for bullion, which is priced in the currency. The U.S. stock markets also showed some caution ahead of the start of the latest earnings reporting round. As gold futures settled Monday, the S&P 500 SPX, +0.10% traded lower, after notching its longest win streak in 1 ½ years through Friday.
Gold for June delivery GCM9, +0.01% on Comex rose $6.30, or 0.5%, to settle at $1,301.90 an ounce. That was the first finish above $1,300 and highest settlement for a most-active contract since March 27, according to FactSet data. The metal fell 0.2% last week. Meanwhile, May silver SIK9, +0.03% rose 13 cents, or 0.9%, to $15.216 an ounce, after losing 0.2% last week.
“Technically, another short-term positive for gold is that it held support near the $1,285 level last week,” based on the June gold contract, said Armbruster. “If $1,285 support had broken on a closing basis, a quick dip to the $1,260 area could have been in the cards.”
“In our view, gold appears to be consolidating around the $1,300 level. A close above $1,330 would be a bullish signal while a close below $1,285 would be bearish,” he said.
Meanwhile, at least one analyst firm attributed gold’s Monday rise to Chinese demand for the metal.
“China’s gold splurge has shorts running for cover today as latest data from the People’s Bank of China has seen the country add some serious weight to its gold reserves over the past few months,” said Stephen Innes, head of trading and market strategy at SPI Asset Management. He cited Bloomberg data saying People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier.
“With China on the bid, it suggests buying on dips will be supported by a suspected China backstop as traders now think their appetite could extend through 2019 as global central banks continue to veer dovish which is adding more glitter to golds long term prospects,” he said.
Other metals traded on Comex settled broadly higher. May copper HGK9, -0.02% added 1.3% to $2.932 a pound. July platinum PLN9, -0.13% rose 0.8% to $912.90 an ounce and June palladium PAM9, +0.01% tacked on 0.5% to $1,353.10 an ounce.
Among the exchange-traded funds, SPDR Gold Shares GLD, +0.43% rose 0.5%, while the VanEck Vectors Gold Miners ETF GDX, +1.16% climbed by 1.3%.
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