Gold granulate is seen at a plant of gold refiner and bar manufacturer Valcambi in the southern Swiss town of Balerna. Picture: REUTERS/MICHAEL BUHOLZER
Gold granulate is seen at a plant of gold refiner and bar manufacturer Valcambi in the southern Swiss town of Balerna. Picture: REUTERS/MICHAEL BUHOLZER

Bengaluru — Gold prices rose to their strongest level in more than two weeks on Monday as the dollar weakened on the hope the US and China are nearing a trade deal, while palladium hit a record high.

Spot gold had gained 0.3% to $1,324.80/oz by 3.24am GMT, just below a nine-month peak of $1,326.30/oz marked on January 31.

US gold futures rose 0.4% to $1,327.8/oz.

“Alleviation of risks around the trade talks has certainly benefited the markets,” said ANZ analyst Daniel Hynes, adding that signs of progress in the discussions had reduced appetite for the dollar, which has been supporting gold.

The dollar was marginally weaker on Monday, as increasing expectations of a US-China trade deal led investors to shift away from the safety of the greenback, which had been the preferred safe-haven during the trade dispute.

The US and China will resume trade talks this week in Washington with time running short to ease their bruising trade war, but US President Donald Trump repeated on Friday that he may extend a March 1 deadline for a deal and keep tariffs on Chinese goods from rising.

Spot gold prices have risen about 3.3% so far this year on the hope that the world’s two largest economies will hammer out a truce and on the expectation the US Federal Reserve will pause its cycle of interest rate hikes.

Minutes of the Fed's January policy meeting are due on Wednesday and should provide more guidance on the likelihood or not for rate hikes in 2019.

“Looser monetary policies are generally favourable to gold, which has benefited since the Fed paused its tightening path,” said Nicholas Frappell, global general manager, ABC Bullion.

“The market will be looking closely at US and China data and I think gold will target a retest of the $1,326 level again.”

Meanwhile, palladium hit a record high of $1,449/oz and stayed in a broad $20 range in early trade.

“In combination with supply-side issues, the market is going to be in a sizeable deficit this year … potential for better-than-expected demand from China will exacerbate that tightness,” ANZ’s Hynes added.

Silver was up 0.2% at $15.80/oz. 

Platinum rose 0.4% to $805.50/oz, near two-week high. 

Reuters