Gold Stabilizes After Friday Tumble

By Amrith Ramkumar and David Hodari

Gold prices inched higher Monday, stabilizing after tumbling alongside other commodities Friday amid worries about trade tensions and higher interest rates.

Front-month gold for June delivery closed up 0.1% at $1,276.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices hit their lowest level of the year Friday, failing to get a haven-demand boost from ongoing trade friction between the U.S. and China with some investors worried about the impact of higher interest rates.

The precious metal struggles to compete with yield-bearing assets like Treasurys as rates rise. Strong growth in the U.S. has also pushed up the dollar of late, making gold more expensive for overseas buyers. The Federal Reserve last week raised rates and forecast two more increases this year.

Still, some analysts expect gold's moves to stay muted with some money managers using the metal to hedge against a sustained market downturn or pickup in inflation.

"I don't think there's a crowd of people waiting for a chance to speculatively sell gold," said Tai Wong, head of metals trading at BMO Capital Markets.

Friday data from the Commodity Futures Trading Commission showed hedge funds and other speculative investors slightly increased net bets on higher gold prices during the week ended June 12, pushing them to their highest level since April.

Among base metals, front-month copper for June delivery shed 1.2% to $3.1035 a pound. Since touching their highest level of the year earlier this month, prices have fallen with investors anxious that protectionist trade policies will slow the global economy and weaken commodity demand. Copper posted its fifth drop in the last six sessions.

Write to Amrith Ramkumar at [email protected] and David Hodari at [email protected]