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Gold holds gains in Asia on weaker dollar, trade concerns

Investing.com -

Investing.com - Gold prices held overnight gains into Asia on Tuesday on a weaker greenback and risk concerns connected to President Donald Trump moving to stamp a new set of policies on global trade, including a proposed border tax on imports.

Gold for February delivery on the Comex division of the New York Mercantile Exchange rose 0.13% to $1,217.15 a troy ounce. Also on the Comex, silver futures for March delivery gained 0.15% to $17.212 a troy ounce. Copper futures rose 0.11% to $2.650 a pound.

The U.S. dollar index rose 0.04% in Asia to 99.99, dipping below 100 for the first time since mid-November. Gold is denominated in dollars, making a weaker greenback more attractive for the two largest importers, China and India.

Overnight, gold prices were sharply higher during North American morning trade on Monday, rising to the strongest level in about two months as the U.S. dollar sank amid uncertainty around the economic policies of new U.S. President Donald Trump.

The U.S. dollar index dollar sold off amid disappointment that U.S. President Donald Trump's inauguration speech on Friday proved light on detail over his plans for economic stimulus.

Trump addressed U.S. manufacturing executives with a repeated promise to impose a border tax on firms that import products into the United States after moving American factories overseas and announced the country had abandoned the Trans-Pacific Partnership trade pact among a dozen nations. Trump's promises of tax cuts and higher federal spending continue to hold the market's attention, but details are sparse.

Trump also said Sunday he would start talks with Mexico and Canada to renegotiate the North American Free Trade Agreement (NAFTA).

Meanwhile, market participants will get back to the business of watching economic data for fresh indications on the health of the economy in the week ahead, with Friday's advanced reading for U.S. growth in the spotlight.

Besides the GDP report, this week's calendar also features U.S. data on existing home sales on Tuesday, initial jobless claims and new home sales on Thursday, followed by durable goods orders and revised consumer sentiment on Friday.

A recent string of solid data reinforced the view that the U.S. economy is sufficiently robust to warrant higher interest rates in the months ahead.

The Federal Reserve indicated last month that at least three rate increases were in the offing for 2017, according to a forecast of interest rates from members of the central bank, known as the dot-plot.

However, traders remained unconvinced. Instead, markets are pricing in just two rate hikes during the course of this year, according to Investing.com's Fed Rate Monitor Tool.

A delay in raising interest rates would be seen as positive for gold, a non-interest-bearing asset, and negative for the dollar.

Investing.com offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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