Gold prices early Monday traded solidly higher, poised for the best gain in August, even as global stocks and the dollar—assets that tend to move in the opposite direction of bullion—gained some traction. Market participants attributed some of bullion’s recent gains to investors wagering that the commodity has achieved a tentative bottom.
December gold futures GCZ8, +0.82% were $9.90, or 0.8%, higher at $1,194.10 an ounce, after registering a weekly loss of 2.9%, the steepest weekly drop for a most-active contact since May 5, 2017, according to FactSet data.
A popular metals exchange-traded fund, the SPDR Gold Trust GLD, +0.93% was up 0.3% in premarket trade, after notching a weekly loss of 2.8%.
Still, gold remains below the psychologically significant level at $1,200 as the yellow metal has been primarily battered by strength in the U.S. dollar, which has undercut appetite for the precious commodity of late. As measured by the ICE U.S. Dollar Index DXY, +0.08% a gauge of the buck against a half-dozen currencies, greenbacks have advanced 4.6% so far this year and about 2% in August thus far.
A stronger dollar can be a negative for gold because it makes dollar-pegged assets, like gold and silver, more expensive for buyers using other currencies.
Gold watchers said that gains over the past few sessions for bullion may be attributed to investors betting that the metal has reached a nadir, where investors perceive it as relatively cheap at its current level below $1,200 an ounce.
“Gold’s overdue a relief rally after last week’s sell off,” Adrian Ash, head of research at BullionVault, told MarketWatch. “Bargain hunting by long term allocators is also playing a part,” he said.
Last week, gold was part of a broad-based selloff in the commodities complex, which also saw high-grade copper slip into bear-market territory, defined as a decline from a peak of at least 20%. Concerns about a spillover effect to emerging markets emanating from a crisis in the Turkish lira USDTRY, +1.7171% has been partly blamed for headwinds in metals, even as those concerns have abated somewhat.
Read: 3 reasons the selloff in Turkey’s lira matters for markets all over the world
“The foreign exchange market has stabilized following recent turmoil that was mainly the fault of a severely depreciated Turkish lira,” said Jim Wyckoff, a senior commodity analyst at Kitco.com.
Separately, optimism over signs of thawing tariff tensions between China and the U.S., which had been a source of dollar strength versus the Chinese yuan, could also be offering gold buoyancy. The trade dispute between Washington and Beijing, one of the biggest gold buyers, has stirred some fear that it could intensify a slowdown in the world’s second largest economy.
On Monday, China’s Shanghai Composite Index SHCOMP, +1.11% rose more than 1% amid reports that China and Washington are laying the groundwork to resolve their protracted clash on trade by sometime in November.
High-grade cooper for September delivery HGU8, +1.48% was 5 cents, or 1.8%, higher at $2.675 a pound, after registering a weekly decline of 4.1% on Friday.
Elsewhere, September silver SIU8, +0.51% added 9 cents, or 0.6%, at $14.730 an ounce, following a weekly fall of 4.3%.
October platinum PLV8, +2.11% advanced $16.40, or 2.1%, to $793.70 an ounce, after plumbing lows not seen in a decade and notching a 6.3% fall on the week. September palladium PAU8, +2.03% rose $18.40, or 2.1%, to $896.20 an ounce, after a weekly fall of 2.6%..
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