Gold prices edged up on Monday, buoyed by a weaker U.S. dollar, as investors looked further ahead than this week, when new U.S. tariffs on Chinese goods are to be introduced, to prospects of further negotiations.
Spot gold edged 0.5% higher to $3,369.17 per ounce as of 11:14 GMT, and U.S. gold futures also increased by 0.5% to $3,376.30. The bullish trend is attributed to sentiment returning to safe-haven assets in light of continued economic instability.
"The more recent strength in gold is modest but persistent, with the primary driver being the weaker dollar," said Giovanni Staunovo, a commodity analyst with UBS. "With the August 1 tariff deadline approaching, markets are understandably focused on whether we end up with new trade deals or whether tariffs will indeed be initiated.
The U.S. dollar index was down 0.3%, which makes gold more appealing to holders of other currencies. A falling dollar tends to push up the price of dollar-denominated commodities like gold.
On the trade front, U.S. Commerce Secretary Howard Lutnick said on Sunday the United States was close to finalizing a trade deal with the European Union. But he reiterated that August 1 is a hard deadline to impose tariffs if there is no deal.
Meantime, the focus is also shifting to the U.S. Federal Reserve's next policy meeting, which will be held on July 29–30. But while the Fed kept interest rates unchanged at its last meeting, increasing inflation expectations and solid economic data are raising doubts that multiple rate cuts will take place this year.
"Investors are buying on dips amid uncertainties surrounding the next move of the Fed, so that's been holding the price of gold," ANZ analysts said in a market update.
Fed Governor Christopher Waller reiterated support last week for a rate cut shortly, preserving speculation among traders.
Among other precious metals, silver gained 0.8% to $38.47 an ounce, and platinum was up 1.6% to $1,444.11. Palladium advanced 2.1% to $1,266.91.
On the demand side, China's gold imports declined for a second consecutive month in June, indicating potential slackness in consumer demand. Imports of platinum also fell, 6.1% below May figures.
