Gold edges higher on weaker dollar, lower U.S. yields

Gold inched higher on Monday as a weaker dollar and lower U.S. Treasury yields bolstered its appeal, while investors awaited data due this week that should help them assess the pace of economic recovery in the United States.

Spot gold was up 0.1pc at $1,882.83 per ounce at 1:42 p.m. EDT (1742 GMT). Last week it reached its highest since Jan. 8 at $1,889.75. U.S. gold futures settled up 0.4pc, at $1,884.5.

A tick lower in the dollar and U.S. yields is acting in gold's favour, Bob Haberkorn, senior market strategist at RJO Futures said, adding stronger equity markets were providing a counterweight.

The dollar was down 0.2pc. U.S Treasury yields fell to the lowest in nearly two weeks, reducing the opportunity cost of holding non-interest paying bullion.

Investors await to hear this week if Federal Reserve speakers will stick to a patient policy. They are also waiting for data, including on U.S. gross domestic product, jobless claims and durable goods.

"If (the data) comes out substantially better than expected, that would probably be bearish for gold, because the likelihood of a Fed taper (of its bond-buying programme) will be sooner rather than later," Haberkorn said, adding if the data is worse-than-expected, gold could trade north of $1,900 fairly quickly.

A crash in bitcoin also supported gold prices, analysts said.

"Gold prices are very strong at these levels. There are any number of things to scare investors into wanting to buy gold, but we also have a situation where in Europe, U.S. and Canada, where the vaccines are starting to have a positive effect," said Jeffrey Christian, managing partner of CPM Group.

"The economies are reopening and economic activity is strong... Maybe gold prices could back off a little bit."

Elsewhere, palladium fell 1.8pc to $2,734.45 per ounce, silver gained 0.8pc to $27.75, and platinum rose 0.7pc to $1,174.31.