Investing.com - Gold prices swung between small gains and losses in North American trade on Monday, staying close to a 28-month high amid speculation central banks in some of the world’s leading economies will step up monetary stimulus.
Britain's vote to leave the European Union last month has ramped up the urgency for central banks around the world to ease monetary policy in the near-term to counteract the negative economic shock from the Brexit vote.
The Bank of England could potentially cut borrowing costs and add to its asset-purchase program when it meets this week.
Meanwhile, in Japan, Prime Minister Shinzo Abe flagged a fresh fiscal stimulus package after his ruling coalition won a landslide victory in the Upper House on Sunday.
The coalition’s firmer grip means policymakers can more easily approve a bigger fiscal stimulus package to spur the economy. A stimulus package of at least 10 trillion yen ($97.9 billion) is expected.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Market participants are also betting that the Federal Reserve would hold off on raising interest rates this year.
The precious metal is sensitive to moves in U.S. rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Gold for August delivery on the Comex division of the New York Mercantile Exchange rose to a session high of $1,376.50 a troy ounce, less than $1.00 away from a more than two-year high hit last week. It last stood at $1,356.10 by 12:45GMT, or 8:45AM ET, down $2.25, or 0.17%.
Gold surged to $1,377.50 last week, a level not seen since March 2014, as uncertainty surrounding global growth in wake of Britain’s vote to exit the European Union sent investors flooding into safe haven assets.
Prices of the yellow metal are up nearly 30% so far this year amid fading expectations of a Federal Reserve rate hike and as expectations mounted that central banks around the world will step up monetary stimulus to counteract the negative economic shock from the Brexit vote.
Also on the Comex, silver futures for September delivery jumped 23.3 cents, or 1.16%, to trade at $20.33 a troy ounce during morning hours in New York, while copper futures advanced 4.3 cents, or 2.03%, to $2.162 a pound.
China published weaker than expected inflation data over the weekend, reinforcing views that more government stimulus steps will be needed to support the economy.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
In the week ahead, market players will be turning their attention to key economic data out of China, with Friday’s second quarter GDP report in the spotlight.
Thursday’s rate decision and monetary policy meeting minutes from the Bank of England will also be in focus, amid mountings expectations for additional stimulus in wake of the U.K.’s Brexit vote.
In the U.S., investors will eye retail sales and inflation data to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
This week also marks the start of the second quarter earnings season in the U.S.