Gold gains ahead of US-China trade talks, set for best month since 2016

Gold prices gained on Friday on uncertainty that a crucial round of US-China trade talks over the weekend would resolve the bilateral dispute.

The precious metal was on track to mark its best month in three years, up 8.2% in June alone, on the back of expectations the US Federal Reserve would ease monetary policy. Prices were up 9.4% in the quarter, its biggest percentage gain since the first quarter of 2016.

Spot gold rose 0.2% in the session to $1,411.83 per ounce as of 10:58 a.m. EDT (1458 GMT). Prices surpassed the key psychological $1,400 level earlier this week to reach $1,438.63 for the first time in six years.

US gold futures for August delivery rose 0.2% to $1,414.80 per ounce.

"There is some nervousness and uncertainty floating around the trade war. ... We have seen a flock to safe haven as trade tensions continue," said David Meger, director of metals trading at High Ridge Futures.

Any easing of trade tensions could take away some safe haven demand for the precious metal, Meger added.

US President Donald Trump and China's President Xi Jinping will meet during a Group of 20 summit this weekend in Osaka, Japan, for talks that could help resolve a year-long trade war between the two nations.

Washington has imposed tariffs on $250 billion of Chinese imports and is threatening to extend those to another $300 billion of goods. China has retaliated with tariffs on US imports.

Meanwhile, the US currency was down 0.2% and was set to turn in its weakest monthly performance since the start of 2018. Bets on interest rate cuts by the Fed have pushed the dollar index down 1.7% this month.

A weaker dollar makes greenback-denominated commodities such as gold more attractive for buyers with other currencies.

"We are still seeing huge investor interest in the precious metal. Markets are pricing in growing expectation for two interest rate cuts to the Fed's base rate in the next few months," said Carlo Alberto De Casa, chief analyst with ActivTrades.

"We can now see a first support area at the psychological threshold of $1,400, while the first resistances are placed at $1,424 and $1,440, the recent peaks.

Silver rose 0.2% to $15.29 per ounce. It has gained 5% in June alone, its biggest monthly gain so far in the year.

Platinum gained 2.2% to $829.13, its highest since June 5. Spot palladium was down 0.4% to $1,545.00 per ounce.