Gold futures finished higher on Monday, bouncing back partially from a steep selloff at the end of last week, as traders looked ahead to interest-rate policy meetings that could set the near-term course for both the dollar and precious metals.
Gold for June delivery GCM6, -0.31% advanced $10.20, or 0.8%, to close at $1,240.20 an ounce. The SPDR Gold Trust GLD, 0.29% was up 0.4%.
Silver for May delivery SIK6, 0.09% rose around 11 cents to finish at $17.009 an ounce.
Gold found support as the Japanese yen regained ground versus the U.S. dollar, wrote Peter Hug, global trading director at Kitco Metals. The metal’s “short-term trajectory…is being directly influenced by the dollar valuation against the euro but especially the yen,” he said.
The greenback continues to affect dollar-denominated gold prices; a weaker dollar makes gold more attractively priced to foreign buyers and vice versa. Early Monday, the ICE U.S. Dollar Index DXY, -0.26% which measures the buck against a basket of currencies, slipped 0.3%.
The dollar fell 0.5% to 111.21 Japanese yen USDJPY, -0.28% Monday after hitting a three-week high against this rival on Friday. That move, in fact, followed recent record-high bullish yen positioning among speculative investors, according to some measures.
Gold ended last week modestly lower after a tumble on Friday. Silver, which has been outrunning gold as it finds underlying industrial-use demand, advanced 3.6% last week. That was its third straight weekly gain.
Central banks could drive currency and metals trading this week. The Bank of Japan is scheduled to issue its policy decision Thursday, a day after the Tuesday-Wednesday gathering of the Federal Reserve wraps up.
“It is widely expected that [the Fed] will sit back and do nothing,” said Naeem Aslam, chief market analyst with AvaTrade. That leaves the Bank of Japan’s decision-making the bigger possible market mover over the Fed, he said.
Dollar/yen remains underpinned “mainly based on the expectations that the [Bank of Japan] will take aggressive measures to weaken the currency,” said Aslam.
But longer term, the expected expansion of monetary accommodation in Japan is unlikely to further support already strong gold unless policy makers essentially “shock” markets with an expansion of negative interest-rate policy, analysts have said.
And those analysts mostly stress that the eventual path for U.S. interest rates continues to point higher, which could support the U.S. dollar and limit the upside for gold.
Rounding out metals trading action, May copper HGK6, -0.49% fell 1.2 cents, 0.5%, to $2.2525 a pound after gaining more than 5% last week. July platinumPLN6, -0.39% rose $7.60 to $1,018.50 an ounce, while June palladium PAM6, -0.54%shed 60 cents to $605.60 an ounce.