Gold futures settled higher on Monday, recouping some of their losses from late last week, as investors questioned the dollar rally’s near-term durability, offering a demand boost for the dollar-priced precious metal.
December gold GCZ8, +0.37% rose $4.70, or 0.4%, to settle at $1,205.80 an ounce. Gold logged a narrow win for last week, but posted declines over the past two sessions in a row.
“There has been a shift in sentiment for gold in recent weeks, as dollar performance has started to struggle,” said Richard Perry, market analyst at Hantec Markets. “If this is the beginning of a dollar correction again, the support should be found in the gold price. A move above $1,217 resistance would be a key technical development to signal a change in trend.”
The ICE U.S. Dollar Index DXY, -0.48% a gauge of the buck against a half-dozen currencies, fell 0.5% to 94.487 in Monday trade.
For now, “gold is stuck in a standoff with the dollar,” said Adrian Ash, head of research at BullionVault.
However, “without a drop in world stock markets or a rush to short-covering by hedge funds to push the price higher, gold could be stuck around $1,200 until we get the [U.S. Federal Reserve’s] new 2019 interest-rate dot plots after this month’s policy meeting.” The central bank’s next monetary policy meeting will be held on Sept. 25 to 26.
Gold also gained as U.S. stocks traded lower, weighed down after a streak of gains as U.S.-China trade worries bubbled up anew. On Friday, Bloomberg reported that President Trump had instructed aides to proceed with tariffs on $200 billion of Chinese products. China, over the weekend, said it may decline the offer for renewed trade talks if the U.S. was moving ahead with tariffs.
December silver SIZ8, +0.48% rose 8.1 cents, or 0.6%, to $14.223 an ounce. It settled Friday at $14.142, the lowest settlement for a most-active contract since January 2016, according to FactSet data. The metal lost 0.2% for last week.
“A stronger economy kept silver as a crisis hedge to a record low and the dollar had a strong year,” Paul Mladjenovic, author of the book, “Precious Metals Investing For Dummies,” told MarketWatch last week.
Silver bottoming at $14, however, “signals a buying opportunity for long-term investors in anticipation of historic conditions that are unfolding currently,” he said. “The past seven years have been a gigantic basing pattern which could be a foundation for a long-awaited rally.”
Hantec Markets’ Perry, meanwhile, said that a key development for silver over recent sessions has been “the move on the gold/silver ratio to record levels.”
“Normally it would be a case where above 80 is considered stretched on a long-term basis. The ratio is currently around 85 and is the highest since 1995,” he said. “This would suggest that gold is likely to underperform silver in the weeks/months ahead.”
Elsewhere, December copper HGZ8, +0.17% added 0.2% to $2.651 a pound, after notching a rise of roughly 0.9% for last week. October platinumPLV8, +0.15% tacked on 0.3% to $800.90 an ounce, after a weekly gain to 2.3%. December palladium PAZ8, +0.67% settled at $977 an ounce, up 0.7% after a narrow advance last week.
The SPDR Gold Trust exchange-traded fund GLD, +0.57% climbed 0.6%, while the iShares Silver Trust SLV, +0.72% rose 0.8% in Monday dealings. The VanEck Vectors Gold Miners ETF GDX, +2.31% traded up 1.9%.