Gold steadied on Monday after paring losses as weak US manufacturing data rekindled worries about a slowing economy, while palladium exceeded $1,860 per ounce in its week-long surge to new all-time highs on a supply crunch.
Spot gold was flat at $1,463.96 per ounce by 1:46 p.m. ET (1846 GMT). US gold futures settled 0.2% lower at $1,469.20. Gold initially fell to a low of $1,453.60 per ounce on a stronger dollar and as better-than-expected manufacturing data from China propped up equities.
"Market started the day on a risk-on tone, but got caught off guard when the ISM data was a bit weaker-than-expected. We saw equities, yields and the dollar all correct, which has helped gold a bit," said Ryan McKay, a commodity strategist at TD Securities. Investors favor gold during times of global uncertainty.
"The notion is that the US Federal Reserve is done cutting (interest rates) for now and we'll need to see a trend in weaker data through early 2020 to convince the market that we're going to get more cuts. Until then, there's no real impetus to see gold rally," McKay added.
The Fed cut rates three times this year and has one more policy setting meeting on Dec.10-11. However, investors now see the Fed keeping interest rates unchanged until at least mid-2020.
Markets also awaited clarity on an interim US-China trade deal. Palladium was up 0.6% at $1,852.49 an ounce, after hitting a new high of $1,861.71 earlier in the session. The metal has been breaking records daily since Nov. 25.
Concerns that supply of the metal used in car exhaust systems could run out has helped to lift prices by more than 47% this year alone, despite a weakening auto sector. Silver shed 0.6% to $16.92 an ounce and platinum edged 0.1% lower to $898.85.