Gold prices edged higher on Monday rising towards their best level since April as the U.S. dollar weakened on hopes the U.S. and China would hammer out an agreement resolving their protracted trade war.
Comex gold futures were up USD2.25, or around 0.2 percent, at USD1,329.95 a troy ounce by 8:40AM ET (13:40 GMT), not far from a 10-month high of USD1,331.10.
Meanwhile, spot gold was trading at USD1,326.91 per ounce, up USD5.50, or roughly 0.4 percent.
There will be no floor trading on the Comex on Monday because of Washingtons Birthday, more widely known as Presidents Day. All electronic transactions will be booked with Tuesdays trades for settlement.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, dipped 0.2 percent to 96.54, well off a 2019 high of 97.23 reached on Friday.
Dollar weakness usually benefits gold, as it boosts the metals appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Markets will be keeping abreast of the next round of trade discussions between the U.S. and China in Washington this week, as the two sides race to reach a deal that would avert a tariff increase on Chinese goods by March 1.
U.S. tariffs on USD200 billion in imports from China are set to rise to 25 percent from 10 percent if no deal is reached by March 1, but U.S. President Donald Trump said that he may extend the deadline if the two sides were close a deal.
Investors will also focus on the release of the minutes from the Federal Reserves last meeting, due on Wednesday, for further insight into the outlook for monetary policy in the months ahead.
After the Fed hiked rates four times in 2018, investors now expect the U.S. central bank to halt its monetary tightening policy this year as risks to the U.S. economy mount.
Looser monetary policies are generally favorable to gold, which has benefited since the Fed paused its tightening path, said Nicholas Frappell, global general manager, ABC Bullion.
In other metals trading, silver futures tacked on 6.9 cents, or about 0.4 percent, to trade at USD15.81 a troy ounce.
Meanwhile, palladium futures jumped 1.6 percent to reach an all-time high of USD1,430.45 an ounce.
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, said ANZ analyst Daniel Hynes.
Reuters contributed to this report
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