Investing.com - New targets above $1,300 are in gold bugs' sights, but not before the outcome of the U.S.-China trade talks. But palladium has hit record highs above $1,300.
Officials from Washington and Beijing kicked off talks in China's capital on Monday in the first face-to-face meeting since President Donald Trump and his Chinese counterpart Xi Jinping in December agreed to a 90-day truce in their trade war.
Both the spot price of bullion and futures of gold got to within $5 of revisiting Friday's $1,300 per troy ounce highs. But they settled off those on caution that a positive outcome to the trade talks could bring on a rush of appetite for risk assets that wold be unfavorable to gold, which is a traditionally a hedge against financial and political troubles.
COMEX gold futures settled up $4.10, or 0.3%, at $1,289.90 after an intraday high of $1,296.50. On Friday, COMEX gold scaled a 7-month high of $1,300.35.
The spot price of bullion rose to as high as $1,295.13 on Monday.
"There's optimism that the U.S. might reach a trade agreement with China in the next 24 to 48 hours," said Philip Streible, senior market strategist for precious metals at RJO Futures in Chicago. "That's taken a little bit of gold's momentum off, as we expect a bit of sector rotation into things like copper, soybeans, sugar and other commodities if that happens."
But some gold bugs are also riding on Fed Chairman Jerome Powell's remarks from last week that he might be more "patient" with rate hikes in 2019, just as Trump has been hoping the central bank would.
Fewer rate hikes could mean a higher potential for inflation, a factor that usually boosts gold as a store of value.
Spot palladium, meanwhile, hit a record high of $1,314.40 per troy ounce in a strong bid for the precious metal used in purifying auto emissions.
Futures of palladium's sister metal platinum slid 0.1% to $826.90 by 3:49 PM ET (20:49 GMT).
Silver futures fell 0.5% to $15.75.
In base metals, COMEX copper tumbled 0.4% to $2.64 per pound.