Gold ticks up in quiet trade, as Wall Street surges to fresh record-high

Commodities

Gold inched up on Monday in quiet, range-bound trade, as U.S. equities surged to fresh record-highs amid a continued rally in crude futures, while the dollar remained relatively weak due to the prospect of further easing from top central banks worldwide.

On the Comex division of the New York Mercantile Exchange, Gold for December delivery traded between $1,341.00 and $1,349.05 an ounce before settling at $1,347.75, up 4.55 or 0.34% on the session. Since surging to fresh 28-month highs in early-July, Gold has fallen back approximately $30 an ounce in broad risk-on trade as government bond yields throughout the world linger near all-time record lows. Still, the precious metal has soared more than 25% over the first seven months of 2016 and is on pace for one of its strongest years in the last three decades.

Investors on Monday continued to monitor global central bank activity closely ahead of next week's Jackson Hole Summit for leading central bankers in Wyoming. On Monday, the Nikkei fell 0.3% amid subdued economic growth in Japan over the three-month period through June, exacerbating concerns that further stimulus plans could be forthcoming before the end of the year. Over the quarter, Japan's economy grew at a rate of 0.2% over the prior 12 months, sharply below forecasts of a 0.7% increase and marking a considerable slowdown from gains of 2% over the first three months of the year. The subdued report comes in the wake of the launch of a ¥28 trillion stimulus plan aimed at staving off deflation.

In addition, stock markets in China soared roughly 3% to a seven-month high, as investors prepared for fresh stimulus measures in the world's second-largest economy following the release of weak economic data on Monday. Last month, new bank loans in China rose to 463.6 billion yuan, the data showed, approximately half the level anticipated by economists in a Bloomberg survey. The weak reading triggered for fresh concerns of the need for loose monetary policies by the People's Bank of China to jumpstart an economy mired in the slowest period of economic growth in two decades.

China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.

As leading central banks worldwide continue to employ unconventional negative interest rate policies in an effort to boost economic growth, the Federal Reserve weighs the timing of its next interest rate hike. When the Federal Open Market Committee (FOMC) approved a 25 basis point rate hike last December, the U.S. central bank estimated that it could raise rates as much as four times this year at the start of its first tightening cycle in nearly a decade. The FOMC, though, has left rates steady at each of its five meetings this year amid mixed employment data and below target inflation.

Any rate hikes by the Fed in 2016 are viewed as bearish for Gold, which struggles to compete with high yield bearing assets in rising rate environments.

Meanwhile, all three major indices on Wall Street hit fresh record-highs early in Monday's session, as oil futures hit 3-week highs. U.S. stocks have remained in record territory throughout the summer after staging an unexpected rebound during the early stages of the Post-Brexit crisis.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.15% to an intraday low of 95.43. Since hitting a four-month high at 97.62 in late-July, the Dollar has retreated by approximately 2%.

Dollar-denominated commodities such as Gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for September delivery gained 0.159 or 0.81% to 19.862 an ounce.

Copper for September delivery rose by 0.012 or 0.56% to 2.151 a pound.

Source by Investing.com