Gold prices traded higher on Monday, following a weekly advance for the most-active contract in four weeks. The U.S. dollar and Treasury yields remained unchanged, providing some relief for the yellow metal which had faced recent pressure.

Price Action

  • Gold futures for December delivery (GC00) gained $2.40, or 0.1%, reaching $1,942.30 per ounce on Comex.
  • Silver futures for September delivery (SI00) rose by 1 cent, or 0.2%, to $24.61 per ounce.
  • October platinum (PL00) fell by $1.20, or 0.1%, to $947 per ounce, while palladium for September (PA00) gained $6.90, or 0.6%, amounting to $1,236 per ounce.
  • Copper for September delivery (HGU23) increased by 2 cents, or 0.4%, to $3.80 per pound.

Market Drivers

Gold prices experienced a decline on Friday after Federal Reserve Chairman Jerome Powell suggested the possibility of more interest-rate hikes in the future. Nevertheless, prices managed to gain over 1% for the week due to concerns about a slowing economy and tumultuous markets in China, which fueled demand for the yellow metal.

The key question now is whether global bond yields will continue to rise, placing additional pressure on gold. Another factor to consider is the U.S. dollar, which is approaching its highest level since March.

According to Tom Essaye, a former Merrill Lynch trader and founder of Sevens Report Research, gold has held support at the $1,900 area on the charts. However, further strength in the dollar or increasing yields could jeopardize gold’s year-to-date performance.

The yield on the 10-year Treasury note (BX:TMUBMUSD10Y) was marginally lower at 4.231%, while the ICE U.S. Dollar Index (DXY), which measures the value of the dollar against its main rivals, slightly increased to 104.10. It is important to note that bond yields move inversely to prices.

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