Gold futures rebounded to end higher on Monday, as the dollar trended lower against a basket of major currencies and on safe haven demand as world wide equity markets continued to decline, led by a sharp sell-off on the Shanghai market.
Gold prices climbed after the U.S. dollar slipped against most major currencies, with investors playing it cautious ahead of the Federal Reserve policy meet outcome later this week.
The precious metal was impacted by some weak performance of the Chinese stock market, creating deep concerns among investors. The Shanghai stock exchange declined a near 8.5 percent for a second straight session of losses, making it the worst daily percentage decline since February 27, 2007.
Markets in Europe also ended firmly in negative territory on Monday, while the U.S. markets are also under pressure.
In economic news, a Commerce Department report on Monday showed durable goods orders in the U.S. rebounded strongly in June, after reporting a sharp drop in new orders for manufactured durable goods in the previous month.
Meanwhile, the Fed is widely expected to leave interest rates unchanged on the conclusion of its 2-day meet on Wednesday. Traders are likely to keep a close eye on the accompanying statement for any hints about the timing of the first rate hike.
Gold for August delivery, the most actively traded contract, jumped $10.90 or 1.0 percent, to settle at $1,096.40 an ounce, on the Comex division of the New York Mercantile Exchange on Monday.
Gold for August delivery scaled an intraday high of $1,104.40 and a low of $1,087.70 an ounce.
On Friday, gold prices fell $8.60 or 0.8 percent, to settle at $1,085.50 an ounce, as the dollar strengthened with continued investor concerns over the timing of the imminent Federal Reserve interest rate hike this year.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, edged down to 680.15 tons on Monday, from its previous close of 684.63 tons on Friday.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.43 on Monday, down from its previous close of 97.26 in late North American trade on Friday. The dollar scaled a high of 97.29 intraday and a low of 96.29.
The euro trended higher against the dollar at $1.1108 on Monday, as compared to its previous close of $1.0985 in North American trade late Friday. The euro scaled a high of $1.1128 intraday and a low of $1.0971.
On the economic front, a Commerce Department report on Monday showed new orders for U.S. manufactured durable goods to have jumped 3.4 percent in June following a revised 2.1 percent decrease in May. Economists expected orders to increase by 3.1 percent compared to the 2.2 percent drop reported for the previous month.
Germany’s business morale unexpectedly improved in July after concerns due to the uncertainty regarding Greece and its future in euro eased, results of a key survey revealed Monday.
The Ifo Business Climate Index for German trade and industry rose to 108 from June’s revised 107.5, a four month-low. Economists had expected the measure to edge up a point from June’s 107.4 original score.
Germany’s import prices declined at a faster-than-expected pace in June, data from Destatis showed Monday. Import prices slid 1.4 percent year-over-year in June, just above economists’ expectations for a 1.3 percent decrease. In May, prices had fallen 0.8 percent.
U.K. factory order growth slowed in July to its lowest level in two years, as a strong sterling and weak global conditions weighed on the export outlook, survey data from the Confederation of British Industry showed Monday. The total order book balance dropped to -10 percent in July, which was the lowest since July 2013, when it was -12 percent. Economists had expected a balance figure of -7.
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