Gold prices rose Monday as the U.S. dollar weakened, and investors awaited monetary policy decisions from central banks in Japan and the U.S.
Gold for December delivery settled up 0.6% at $1,317.80 a troy ounce on the Comex division of the New York Mercantile Exchange. Monday’s move higher broke a two-day losing streak that had sent gold prices to the lowest level since Sept. 2.
The WSJ Dollar Index was recently down 0.3% at 86.88. Gold is priced in dollars and becomes cheaper to foreign buyers when the U.S. currency weakens.
Upcoming policy meetings at the Bank of Japan and the Federal Reserve have put the market on edge in recent weeks, with investors scaling back positions in case of unexpected changes to interest rates.
“This week should be eventful enough on the gold market,” Commerzbank analysts wrote in a Monday note. “While no surprises from the Fed meeting are likely given the latest rather weak U.S. data, the market will doubtless be looking toward Tokyo with bated breath.”
While the majority of traders don’t expect the Fed to raise interest rates in September, recent comments from central bank officials that a rate increase would be appropriate have put pressure on gold. Low rates are a boon for gold, which pays its holders nothing and struggles to compete with yield-bearing assets when borrowing costs rise.
“It remains unlikely that the Fed moves in September but should they surprise, the market is unprepared,” said Peter Hug, global trading director at Kitco Metals, in a Monday email.
Source: Wsj
