Gold prices settle higher after back-to-back session losses

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Gold futures finished higher on Monday, finding support as the U.S. dollar and Treasury yields steadied, easing some of the recent pressure on prices for the precious metal.

The move comes after the most-active gold contract booked its first weekly advance in four weeks through Friday.

Price action

  • Gold futures for December delivery 

    gained $6.90, or 0.4%, to settle at $1,946.80 per ounce on Comex after trading as high as $1,954.20, FactSet data show.

  • Silver futures for September delivery

    gained 2 cents, or nearly 0.1%, to $24.25 per ounce.

  • October platinum

    added $24, or 2.5%, to $972.20 per ounce. Palladium for September delivery

    gained $27.20, or 2.2%, to $1,256.30 per ounce, while December palladium
    which is also among the most active, settled at $1,261.90, up $29.10, or 2.4%.

  • Copper for September delivery
    edged down by a penny, or 0.2%, to $3.76 per pound, while December copper
    which is now the most active, added a cent, or 0.2%, to settle at $3.79.

Market drivers

Gold prices “delinking from a rising bond yield and U.S. dollar is a positive bullish sign,” said Chintan Karnani, an independent consultant who has tracked the gold market for the last 20 years. However, he said, “gold needs to continue to trade with a rising price line next week for a confirmation of a sustained bullish trend.”

He said he’ll be closely watching for indications of a “sustained break of various resistances” between $1,950 and $2,010 in Comex December gold.

Read: ‘We are buyers of gold on weakness’: Yellow metal appears resilient after surge in real rates, says Morgan Stanley

Gold prices had tumbled Friday after Federal Reserve Chair Jerome Powell hinted at the possibility of more interest-rate hikes.

An “interest rate pause and interest rate cuts will be decided on the basis of incoming U.S. economic data releases over the coming weeks and months,” said Karnani. “A slowdown or a sustained fall in inflation is needed for the USA to enter into an interest rate pause period.”

Still, gold prices managed a more than 1% gain last week, as worries about a slowing economy and turbulent markets in China helped spur demand for the yellow metal.

The big question now is whether global bond yields will continue to climb, heaping more pressure on the yellow metal. Another threat is the U.S. dollar, which is nearing its highest level since March.

“On the charts, gold has held support at the $1,900 area, but more dollar strength or rising yields would jeopardize the [year to date],” analysts at Sevens Report Research said in Monday’s newsletter.

The yield on the 10-year Treasury note
was down modestly at 4.218%, while the ICE U.S. Dollar Index
a gauge of the buck’s value against its main rivals, was little changed at 104.07. Bond yields move inversely to prices.

Gold’s price trend after the release of U.S. August nonfarm-payroll data on Friday will be key, said Karnani. “The current bullish trend in gold and silver can change if the overall jobs growth is very high for the month of August.”

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