Gold is steady near a five-week high this morning on a weaker dollar and signs of a possible U.S.-China trade accord. It’s basically shrugging off overnight world stock market rallies which are giving the U.S. Stocks a big boost, heading for new all-time highs at the opening bell.
The yellow metal is getting support from oil as the Nymex crude oil prices hit a six-week high overnight and a weakened U.S. dollar index.
Bullion advanced 0.4% last week, its second consecutive weekly rally. The most-active December contract slipped 0.2% Friday to settle at $1,511.40 an ounce on Comex. It gained 2.8% in October. Currently, the December contract is at 1,512.20.
The dollar weakened after a stronger-than-expected U.S. jobs report Friday. The U.S. added 128,000 jobs in October, the Labor Department reported Friday, more than the 75,000 estimated in a survey by MarketWatch. A weaker dollar typically bolsters gold as a more attractive investment.
The U.S. currency could fall further if a trade deal between the U.S. and China is reached, because the currency will lose its appeal as a safe-haven asset, according to an analysis by FX Empire. The U.S. Dollar Index could fall to as low as 85 as the U.S. Federal Reserve expands its balance sheet, Citigroup’s Mohammed Apabhai, told CNBC Friday. The index was at 97.22 early Monday, down 0.6% since Oct. 25.
Meanwhile, U.S. Commerce Secretary Wilbur Ross told the Financial Times on Sunday that he’s “quite optimistic” that the sticking points in U.S.-China trade talks will be resolved soon. Gold skyrocketed earlier this year on the dispute, as investors sought haven assets.
In economic news this week, the U.S. durable goods and factory orders data come out on Monday, and regional Federal Reserve presidents are set to speak at events Wednesday.
Investors are keeping a close eye on economic news and comments by central bankers for indications on whether the Fed will cut interest rates for a fourth consecutive time in December. The Fed cut rates by 25 basis points Oct. 30. The CME FedWatch Tool showed just an 8.9% probability of another cut at the Federal Open Market Committee’s next meeting Dec. 11, while 91.9% predicted no change early Monday. The figures have shifted from a week earlier, when 77.8% predicted no change, 18.3% anticipated another cut and 3.9% forecast an increase.
In addition to the trade talks and the economy, investors are still closely watching the latest efforts to impeach U.S. President Donald Trump as Democrats positioned themselves this week to escalate the offensive.
Silver increased 0.7% last week, though the most-active December contract slipped 1.5 cents to $18.05 an ounce Friday on Comex. It gained 6.3% in October. Spot palladium rallied Friday and was up 7.3% in October. Spot platinum also rose Friday and was up 5.6% last month.