Investing.com - Metal prices were broadly higher on Monday as the dollar came under pressure after the United States and Mexico reached a bilateral trade deal.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose by $1.70, or 0.14%, to $1,215.00 troy ounce.
The dollar fell sharply, helping gold prices to mount a further advance beyond the psychologically important $1,200 level, as President Donald Trump announced his administration had reached a bilateral deal with Mexico.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.46% to 94.64.
Dollar-denominated assets such as gold are sensitive to moves in the dollar. A fall in the dollar makes gold cheaper for holders of foreign currency and raises demand.
Trump suggested a United States-Mexico Trade Agreement replace the North American Free Trade Agreement (NAFTA). But this still paves the way for Canada to rejoin talks, bringing Trump a step closer to overhauling NAFTA, reducing investor fears over a full-blown trade war.
Fears over a trade war had kept demand for the greenback elevated on expectations that the strong U.S. economy would be less troubled than that of its rivals.
Gold prices added to gains from last week, when they snapped a six-week losing streak following a sharp rise on Friday when Federal Reserve Chairman Jerome Powell all but dismissed any notion that the Federal Reserve would step up the pace of rate hikes.
Yet data last week showed traders continued to increase their bets on a further decline in gold prices.
CFTC COT data showed money managers increased their net short positions in gold futures to 8,700 lots from 3,700 lots for the week ended Aug. 24.
The plunging dollar supported the broader metals market as zinc and nickel futures soared.
Copper prices rose 0.18% to $2.73, while zinc prices rose 2.72% at 2,532.75.
Zinc prices were also supported by data showing zinc stocks in China fell 11.8% last week to 30,800 tonnes, their lowest level since October 2007.
Aluminium prices rose 0.92% to 2,093.00, while nickel futures gained 1.44% to 13,430.00.
Silver futures rose 0.21% to $14.83 a troy ounce, while platinum futures added 1.42% to $800.60.