Gold futures climbed by more than $20 an ounce on Monday as talks between Greece and its international creditors dragged on and investors awaited the outcome of this week’s meeting of Federal Reserve policy makers.
Gold for June delivery on Comex GCM5, +2.41% rose $24, or 2%, to $1,199 an ounce after touching a high of $1,201. Prices fell 1.6% on Friday to settle at their lowest level in five weeks.
May silver SIK5, +4.73% advanced 75.4 cents, or 4.8%, to $16.38 an ounce. July silver SIN5, +4.72% which is also among the most-active contracts, added 76.5 cents, or 4.9%, to $16.445 an ounce.
Investors will closely watch the statement following the conclusion of a two-day meeting of Federal Reserve policy makers on Wednesday, looking for any clues the central bank is becoming less likely to raise interest rates this year, analysts said. Expectations for a midyear rate hike have already been pushed back, following weaker economic data and subdued inflation pressures.
“With the risk of a dovish Federal Reserve tone being present, I believe this week could be a volatile one for gold, especially if eased back interest-rate expectations encourage [U.S. dollar] weakness,” said Alex Gurr, analyst at FXTM, in a note.
A weaker dollar can be a positive for commodities priced in the currency, as it makes them less expensive in terms of other currencies. Likewise, a stronger dollar can weigh on gold and other commodities. The greenback DXY, -0.46% traded a bit higher against the euro EURUSD, +0.44% on Monday.
“Both the dollar and gold are up which is not what one would ordinarily expect,” Ross Norman, chief executive officer at Sharps Pixley Ltd., said in an email from London. “The dollar as a driver for gold can be trumped by other things such as geopolitical concerns and the lack of a clear and positive outcome seems to be playing on investors minds here in Europe.”
Norman said Sharps Pixley has seen an “unprecedented flow of physical buying over the last few days, which is several orders of magnitude what we would usually expect.”
“Buyers in London are citing fears about the euro as well as a likely fragmentation of voting loyalty, leading potentially to weak government here in the U.K.,” Norman said.
Gold is likely seeing some haven-related demand as talks between Greece and its international creditors drag on. Greece has shuffled its negotiating team in a move that could reduce the influence of its outspoken finance minister, Yanis Varoufakis.
In other metals trade, July platinum PLN5, +2.57% rose $27, or 2.4%, to $1,148.40 an ounce, while June palladium PAM5, +1.60% advanced $12.40, or 1.6%, to $782.65 an ounce.
May copper HGK5, +0.71% rose 2.65 cents, or 1%, to $2.775 a pound, while July copper HGN5, +0.76% traded at $2.778, up 2.5 cents, or 0.9%.
