Gold gained mildly in Asia on Monday in safe haven buying as tension between China and the U.S. over the South China Sea simmers.
The latest flareup appears resolved with China agreeing to return the US underwater drone that it seized in international waters earlier this week, the Pentagon said Saturday, but President-elect Donald Trump weighed in with a tweet telling Beijing to keep the prove it "stole."
Gold for February delivery on the Comex division of the New York Mercantile Exchange edged up 0.16% to $1,139/25 a troy ounce. Also on the Comex, silver futures for March delivery dipped 0.11% to $16.197 a troy ounce, while copper for March delivery fell 0.12% to $2.546 a pound.
In the week ahead, market players will be eyeing the release of Thursday’s final reading on U.S. third quarter gross domestic product for fresh indications on the strength of the economy and further hints on the future path of monetary policy.
Meanwhile, market participants will be awaiting a monetary policy announcement from the Bank of Japan on Tuesday, with most investors expecting the bank to hold its negative interest rates and 10-year government bond yield target steady.
Last week, gold prices bounced off the previous session's 10-month lows on Friday, but the precious metal still posted its sixth straight weekly decline as expectations for higher U.S. interest rates in the months ahead continued to weigh.
The U.S. central bank predicted it would raise interest rates three times in 2017, up from the two hikes predicted in September. Both a strong dollar and higher interest rates are typically bearish for gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.
Gold prices have slumped since Donald Trump was elected president as rising U.S. bond yields and a rally in stocks markets have damped its appeal.
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