By Myra P. Saefong and Rachel Koning Beals
Gold futures settled narrowly higher on Monday, taking back some of last week’s decline, with investors showing caution after a failed weekend coup in Turkey.
Prices suffered a loss of 2.3% last week, their first weekly loss in nearly two months as record-high U.S. stocks and the Bank of England’s pass, for now, on cutting interest rates lured investors into riskier markets away from nonyielding gold.
“A coup attempt in Turkey late Friday that was quickly quashed, but not without violence, has not had a serious impact on the world marketplace,” said Jim Wyckoff, senior technical metals analyst at Kitco. “Traders and investors reckon the matter was an isolated incident.”
The city of Ankara shut down the coup attempt, but Turkish stocks fell sharply Monday and its currency, the lira USDTRY, +0.0369% weakened. That helped to underpin demand for gold.
August gold GCQ6, -0.03% tacked on $1.90, or 0.1%, to settle at $1,329.30 an ounce after touching an earlier low at $1,323.50. Prices fell last week but over the previous six weeks, had settled higher on a weekly basis for a cumulative gain of nearly 12%.
The recent decline for gold may offer a “good opportunity to get on board” as there are “still way too many uncertainties in the market with respect to the after math of Brexit and the upcoming U.S. elections,” said Naeem Aslam, chief market analyst at ThinkForex. “Unrest in global geopolitics [is] further adding color to this picture.”
The ICE U.S. dollar index DXY, -0.02% wavered between small losses and gains versus other currency rivals, offering little directional guidance for gold. The greenback and yellow metal typically move inversely although that relationship had been challenged in recent trading sessions.
U.S. equities traded modestly higher as of gold’s settlement. Prices for the metal pulled back from earlier highs as U.S. stocks edged up toward last week’s record highs, said Tyler Richey, co-editor of The 7:00’s Report.
Richey said he sees near-term support for gold at just above $1,320 and on a longer-term basis, and on a longer time frame, he believes the metal is “overextended to the upside after the post-Brexit rally” so a further pullback to $1,300 or even below “would not be surprising.”