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Gold futures finished with a modest gain on Monday, holding to a tight trading range, with an overall a wait-and-see mood taking hold ahead of the much-touted meeting over North Korea’s denuclearization and a bevy of major central bank gatherings in the coming week.
“Gold is range bound at present until after the FOMC meeting concludes and the market absorbs the statement and signals for next interest rate increase,” said Jeff Wright, executive vice president at GoldMining Inc.
“The real variable or mystery is gold and market response to the Trump-Kim summit in Singapore,” he said. “Obviously, a negative public spectacle would not play well in global markets and create some strong safe haven demand, but that is a low probability.”
Wright said he would consider “incremental progress” in Singapore and a promise of continued talks and a future meeting to be “a win,” which would “put a little downward sentiment on gold.”
U.S. President Donald Trump and North Korean leader Kim Jong Un will meet on Tuesday in Singapore.
August gold tacked on 50 cents to settle at $1,303.20 an ounce, holding between a low of $1,297.80 and high of $1,307. The metal had managed a small weekly return of about 0.3% last week after challenging the closely watched $1,300 line.
Meanwhile, global trade issues remained in the fore, though fresh direct market impact was so far limited, after weekend tensions between Trump and Canadian Prime Minister Justin Trudeau, with Trump withdrawing his support for the Group of Seven communiqué after Trudeau criticized U.S. tariffs on Canadian metals.
Fair Trade is now to be called Fool Trade if it is not Reciprocal. According to a Canada release, they make almost 100 Billion Dollars in Trade with U.S. (guess they were bragging and got caught!). Minimum is 17B. Tax Dairy from us at 270%. Then Justin acts hurt when called out!
— Donald J. Trump (@realDonaldTrump) June 11, 2018
“The trade-related spat between the U.S. and Canada that is becoming more vitriolic underscores the fading hopes the U.S. and its major trading partners can avoid an escalation in trade sanctions against each other,” said Jim Wyckoff, senior analyst at Kitco.com.
“This matter could be a mixed bag for the gold market,” he said in a note. “From a safe-haven perspective, it’s bullish because of the tensions between the world’s largest economies. However, from a raw commodity perspective, it’s bearish because of the potential for reduced world trade in raw commodities.”
In a note, however, Carsten Fritsch, analyst at Commerzbank, said “the meetings of the Federal Reserve and European Central Bank will play a more important role for gold.”
“While there is every likelihood of the Fed raising interest rates again, the ECB may announce that it will be ending its expansionary monetary policy,” he said.
The Federal Reserve is expected to raise interest rates after its two-day meeting that begins Tuesday. European Central Bank policy makers are expected to announce the timing of a reduction of its crisis-era asset-purchase initiative when it meets on Thursday.
Meanwhile, July silver settled up 1.3% at $16.952 an ounce. It logged a weekly rise of 1.8% as gold’s sister commodity, which also attracts industrial-use demand, handily outperformed its rival. July copper ended at $3.257 a pound, down 1.3%, after logging a sharp weekly rise of 6.5%.
July platinum rose less than 0.1% to $906.40 an ounce. September palladium rose 1.1% to $1,016.50 an ounce.
Among exchange-traded funds, SPDR Gold Shares added 0.1%. The iShares Silver Trust was up 0.8% and the VanEck Vectors Gold Miners ETF rose 0.4%.