Gold gains as dollar index drops with Korea talks, trade row under watch

Gold prices snapped back Tuesday as the dollar fell. Stock gains — seen as investors took heart in some trade-war pushback and reports of continued talks on the Korean Peninsula — appeared to limit the metal’s upside.

April gold GCJ8, +0.99% gained $8.50, or 0.7%, to $1,328.60 an ounce. The contract has been volatile in recent days considering that gold prices had settled at their lowest levels of the year just last Thursday and recorded the first monthly loss, in February, since October. Spot gold has gained over $20 since March 1 when it touched its lowest in two months at $1,302.61 per ounce.
May silver SIK8, +1.57% rose 23 cents, or 1.5%, to $16.65 an ounce. The silver-focused exchange-traded iShares Silver Trust SLV, -0.45% rose 1.3%, while the SPDR Gold Shares GLD, +0.90% traded up 0.8% premarket.

Read: Silver is poised to outpace gold this year
“Softness in the dollar index is helping the precious metal, gold,” said Naeem Aslam, chief market analyst with ThinkMarkets. The ICE U.S. Dollar Index DXY, -0.47% traded down 0.5%. A weaker dollar makes gold priced in the U.S. unit more attractive to investors using another currency.

“The dollar weakness is triggered because of the worries around the global trade war,” Aslam said. “Donald Trump is facing strong political pressure to soften his stance towards his announcements of trade tariffs. If the new form of NAFTA deal is signed and becomes a reality, he may change his mind towards these tariffs.”

Gold futures gained initially last week as the threat of a global trade war in the wake of U.S. steel and aluminum tariffs and potential retaliation pushed stocks and the dollar lower. The currency tumbled to 16-month lows against the safe-haven yen late last week. The trade-related market churning has underpinned a flight to the perceived safety for assets such as precious metals.
But broader market trading Tuesday showed some ease for now in the jitters around trade. The risk-on mood was helped by comments from House Speaker Paul Ryan, who warned about the potential fallout if Trump’s plan to impose tariffs on steel and aluminum imports went ahead — part of a show of resistance by some Republicans to the plan.

Stock futures took an additional step higher Tuesday after South Korea’s presidential office reportedly said the two Koreas will hold their first summit in more than a decade in late April. That comes after North Korean leader Kim Jong Un met with a senior delegation from the South in Pyongyang and said he wanted to “write a new history of national reunification” for the two countries. The reports said North Korea will suspend weapons testing during the summit and would be open to talks with the U.S. about scrapping nuclear weapons and normalize ties.
A trio of Federal Reserve speakers is on the circuit Tuesday. New York Fed President William Dudley is scheduled to give a speech on economic conditions and recovery efforts in the U.S. Virgin Islands Tuesday morning. After the market close, Fed Governor Lael Brainard will speak on the economy and monetary policy in New York. Later, Dallas Fed President Rob Kaplan will take part in a moderated discussion an annual energy conference in Houston.

The data calendar is light, with factory orders for January due at 10 a.m. Eastern, as investors wait for the highlight of the week — the February nonfarm payrolls report on Friday.
Read: Trump, trade wars, inflation: Wall Street on edge ahead of February jobs report
In other trading, May copper HGK8, +1.42% traded at $3.1715 a pound, up 1.4%.
April platinum PLJ8, +0.68% rose 0.6% to $967.40 an ounce, clawing off the two-month lows hit last week. June palladium PAM8, +0.89% rose 0.9% to $986.45 an ounce.