Gold futures topped $3,400 to kick off the trading week after the yellow metal’s ascent halted and came to a standstill. Gold prices have been searching for the next catalyst to retest the $3,500 record level. For now, gold is benefiting from a weakening greenback and falling Treasury yields.
August gold futures soared $49.80, or 1.48%, to $3,408.00 per ounce at 18:30 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold is coming off a 1% weekly gain and is up more than 29% this year.
Silver, the sister commodity to gold, surpassed $39 to start the trading week. September silver futures surged $0.866, or 2.25%, to $39.335 per ounce. The white metal climbed 2% last week and is outperforming the yellow metal this year, rocketing 34%.
The metals market is monitoring trade developments on Monday, with the August 1 deadline only days away.
Commerce Secretary Howard Lutnick told CBS News’ “Face the Nation” on Sunday that the United States is close to reaching a trade deal with the European Union, but August 1 is the hard deadline for implementing tariffs.
“These are the two biggest trading partners in the world, talking to each other. We’ll get a deal done. I am confident we’ll get a deal done,” Lutnick said.
Meanwhile, the near-term support is coming from a weaker buck and falling yields.
The US Dollar Index (DXY), a measure of the greenback against a weighted basket of currencies, tumbled 0.65% to 97.84, from an opening of 98.48. The index is down nearly 10% this year and suffered its worst first-half performance in more than 50 years.
A weaker buck is good for dollar-denominated commodities because it makes them cheaper for foreign investors to purchase.
Yields on US Treasury securities were mostly in the red, with the benchmark ten-year down 6.9 basis points to 4.362%. Sliding yields lower the opportunity cost of holding non-yielding bullion.
All eyes will be on next week’s Federal Reserve policy meeting. While investors expect lower rates this year, they anticipate the central bank will hold steady for the fifth straight meeting this year.
Fed Governor Christopher Waller reiterated his support for a July rate cut.
That said, the futures market anticipates the Fed will implement a quarter-point rate cut in September.
“Elevated inflation expectations and strong economic data are weighing on expectations around the number of Fed rate cuts this year. Despite this, the buy-on-dip strategy remains in place, protecting downside risks for gold prices,” ANZ analysts said in a note.
It was quiet on the data front, with The Conference Board’s Leading Economic Index being the only reading on Monday.
The LEI declined at a worse-than-expected pace of 0.3% in June, up from an upwardly adjusted 0%.
In other metal commodities, August copper futures surged $0.0375, or 0.67%, to $5.642 per pound. August platinum futures advanced $36.80, or 2.53%, to $1,493.40 per ounce. August palladium futures ticked up $3.50, or 0.27%, to $1,306.50 per ounce.