Gold prices rose to a more than one-week high on Monday as a weaker dollar and risk off sentiment in the equity market lifted demand for the safe-haven metal.
Spot gold was up 0.3% at $1,764.92 per ounce by 13:37 pm EDT (1737 GMT). US gold futures added 0.5% to $1,767.6.
“We’re seeing more risk aversion in the markets and gold appears to be benefiting from that. Quite often we’ve seen the dollar do well in these conditions which has dragged on gold, but we’re seeing the opposite today,” OANDA analyst Craig Erlam said.
“Perhaps investors getting a little nervous about central banks withdrawing stimulus at such an uncertain time for the economy.”
The dollar index fell 0.3% against its rivals, making gold less expensive for other currency holders.
Wall Street’s main indexes tumbled as investors shifted out of technology stocks in the face of rising Treasury yields, while fresh US-China concerns over trade and Taiwan offered another reason for caution.
China blamed the United States on Monday for increased tensions over Taiwan and vowed to “smash” any separatist plots, as the island reported the largest ever incursion by China’s air force into its air defense zone at 52 aircraft.
Investors now await US September nonfarm payrolls report due on Friday, which is expected to show a continued improvement in the labor market, which could influence the Federal Reserve’s timeline for tapering economic support.
Reduced central bank stimulus and interest rate increases lift bond yields, raising the opportunity cost of holding non-interest-bearing gold.
“Risk appetite will continue to provide short-term direction in terms of safe-haven demand ahead of the US nonfarm payrolls report on Friday,” said Ricardo Evangelista, senior analyst at ActivTrades.
Silver rose 0.2% to $22.56 per ounce, platinum was down 1% at $962.00, and palladium dropped 1.2% to $1,895.22. (Reporting by Bharat Govind Gautam and Brijesh Patel in Bengaluru; Editing by Lisa Shumaker and Uttaresh.V)