Gold prices reached its strongest in more than two weeks on Monday following the weakened dollar value amidst the high hopes that the United States and China are about to close a trade deal. Palladium closed at its highest level.
Spot gold closed as of 0747 GMT with a gain of 0.1 percent at $1,322.41 per ounce. Gold reached $1,325.30 earlier which is a small cut from a 9-month record of $1,326.30 per ounce marked on Jan. 31.
United States gold futures increase by 0.3 percent to $1,326.1 per ounce. Daniel Hynes, an analyst in ANZ, said that alleviation of risks around the trade talks has certainly benefited the markets. He added that signs of progress in the discussions had reduced appetite for the dollar which has been supporting gold.
On Monday, the dollar marginally weakened while the increasing expectations of a United States-China deal caused investors to look for alternatives away from the currency. Investors preferred a safe haven during the trade dispute.
China and the United States are scheduled to continue the trade talks this week in Washington as the March 1 deadline comes close. On Friday, United States President Donald Trump repeated that he may extend the deadline for a deal and he will postpone the increase of tariffs on Chinese goods. Spot gold prices have increased by about 3.3 percent for the year because of the growing hope that the two largest economies will agree on a truce and as they expect the United States Federal Reserves to pause its imposed cycle of interest rate hikes.
The content of the Federal Reserve's meeting is expected on Wednesday and it will serve as a guide on the likelihood or not for rate hikes this 2019. Nicholas Frappell, the global manager of ABC Bullion, said that looser monetary policies are generally favorable to gold which has benefitted since the Fed paused its tightening path. He added that the market will be looking closely at the United States and China data and he believes that gold will target a retest of the $1,326 level again.
The world's largest gold-backed exchange-traded fund, the holdings of SPDR Gold Trust, dropped to its lowest level in 2019 at 793.03 tonnes on Friday.
Palladium closed reaching its highest record of $1,449 per ounce and it stayed in a $20 broad range in early trade. Its trade increased by 0.7 percent at $1,442 per ounce.
