Gold eases as dollar climbs, with U.S.-China trade talks holding market’s attention

Gold prices retreated Monday as a leading dollar index hovered near more than one-month highs, cutting demand for investors buying precious metals using other currencies.

Riskier markets, including U.S. stocks, headed higher on cautious optimism for the next round of U.S.-China trade negotiations resuming this week, limiting but hardly eliminating the appeal of haven assets, including gold.

April gold GCJ9, -0.76%  was down $7.80, or 0.6%, at $1,310.70 an ounce. It fell 0.3% last week, but has climbed 2.9% since the end of last year based on the most-active contract as uneasy trade progress, grouped with a series of global growth downgrades, sent investors to seek cover in lower-risk pockets of the financial markets.

The SPDR Gold Shares ETF GLD, +0.38%  fell 0.6% in early action.

The ICE U.S. Dollar Index DXY, +0.19% a measure of the U.S. currency against a basket of six major rivals, was up 0.2% at 96.83 after it posted a weekly rise of 1.1% last week.

Investors are looking ahead to trade talks this week with a delegation of U.S. officials traveling to China for the next round. U.S. President Donald Trump said last week that he had no plans to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal. Trump has vowed to increase U.S. tariffs on $200 billion worth of Chinese imports to 25% from 10% if the two sides cannot reach a deal. That action is seen aggravating economic growth at a time when a late-cycle recovery is already showing signs of sputtering.

Read: White House discussing possible trade summit with China at Mar-a-Lago: report

“With the yellow metal being down by less than what the dollar is up we conclude that underlying demand remains strong but also that the market was struggling to move higher as global stocks recovered,” said Ole Hansen, head of commodity strategy with Saxo Bank, in a recent note.

“With stocks now showing signs of rolling over in response to trade talks concerns and a weaker growth forecast, gold should find enough support once again to prevent a serious challenge at support, currently at $1,300 an ounce, followed by $1,275,” he added.

In other metals trade, March silver SIH9, -0.82%  fell 9 cents, or 0.6%, to $15.71 an ounce. Prices were down 0.8% last week. March copper HGH9, -0.53%  fell 0.6% to $2.7935 a pound after it logged a weekly gain of 1.4%.

April platinum PLJ9, -1.07%  fell 1% to $794.30 an ounce, extending last week’s decline of 2.9%. March palladium PAH9, -0.72%  slipped 0.4% to $1,366.30 an ounce. The market was pulling back from a Friday finish at $1,371.20 an ounce — another record settlement and a weekly gain of 4.4%.

Read: Iron-ore prices rally to nearly 2-year high in wake of fatal dam breach

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