Gold prices trade near the flatline as dollar softens

London (Aug 31)  Gold futures traded around break-even levels on Monday as the U.S. dollar weakened slightly heading into the last trading session in August.

Bullion continues to be viewed as a haven in the face of the COVID-19 pandemic, and the precious metal drew increased attention last week after the Federal Reserve said it is shifting to a policy of average inflation targeting which would effectively see policy makers end the practice of pre-emptively hiking interest rates to stave off inflation. That setup is viewed as a bullish one for gold, which is viewed as a hedge against rising inflation.

Expectations for a low-rate regime in the U.S., and in much of the developed world, and softness in the U.S. dollar also has boosted appetite for gold, experts say.

“Gold will continue to be one of the best beneficiaries of the dollar’s weakness so expect to see a retest above $2,000 in the upcoming weeks,” wrote Hussein Sayed, chief market strategist at FXTM, in a Monday note.

December gold GCZ20, -0.05% GC00, -0.04% picked up 30 cents, or less than 0.1%, at $1,975.10 an ounce.

Gold’s move comes as the U.S. dollar was off 0.2%, as measured by the ICE U.S. Dollar Index DXY, -0.19%, a gauge of the buck against a half-dozen currencies.

The most-active December silver contract SIZ20, 1.40% SI00, 2.06%, meanwhile, added 47 cents, or 1.8%, at $28.26 an ounce. Hope for some pickup in economic activity, amid promises of potential coronavirus treatments, also has boosted appetite for silver, which is viewed as both an industrial and precious metal.

Last week, gold saw a weekly rise of 1.4%, while silver tallied a weekly advance of nearly 4%, based on last Friday’s most-active contract settlements, according to Dow Jones Market Data. For the month, gold declined 0.5%, while silver surged 16% for the month, according to FactSet data.

MarketWatch