Gold price rebounds ahead of key US data

Gold prices edged higher on Monday to maintain above the $3,300-an-ounce level, a sharp turnaround on its early morning decline, as investors await key US data due this week.

Spot gold rose 0.3% to $3,330.38 an ounce by 11:30 a.m. ET, having dropped as low as $3,268.62 earlier in the day. US gold futures saw similar swings, from down 1.7% to a 1.5% gain at $3,347.20 per ounce.

Bullion declined during the early hours of trading as improved optimism over a US-China trade deal from last week lingered. However, the market remains skeptical over an agreement can be reached. Last week, Beijing shot down US President Donald Trump’s assertions that the two countries were discussing a deal.

Moreover, Trump also claimed last week that his administration has already struck 200 trade deals, but refused to reveal any other details.

While “a nervous sense of calm has returned” in the global marketplace, “the idea that multiple deals could be wrapped up within weeks seems overly optimistic,” Charu Chanana, a strategist at Saxo Capital Markets, told Bloomberg.

Investors now look ahead to key US data due this week to gauge the impact of tariffs on the economy. These include the job openings report on Tuesday, Personal Consumption Expenditures on Wednesday, and the nonfarm payrolls report on Friday.

Too bullish?

Gold’s recent selloff accelerated as traders bet on signs that its explosive rally may have run too fast.

Hedge fund managers cut their net-long US futures and options positions on the metal to the lowest in 14 months, the latest Commodity Futures Trading Commission data show.

Shifts in options positioning — which last week saw trading volumes on the SPDR Gold Shares ETF surpass a record 1.3 million contracts — could point to an overheated market in the short term as prices run ahead of fundamental drivers, according to Barclays Plc.

Still, bullion remains up by about 25% this year, setting multiple records along the way, as Trump’s aggressive trade policy and fears about the global economy spurred demand for haven assets.

The gains have also been supported by inflows into gold-backed exchange-traded funds, central bank purchases and signs of strong speculative demand in China.

(With files from Bloomberg)