COMEX gold futures rose 1.7 per cent on Monday as expectations of rising inflation raised concerns about stock market valuations and prompted investors to turn to safe-haven gold, further supported by a weaker dollar.
April gold futures, the most actively traded, closed up 1.74 per cent, or $31, to settle at $1808.40 an ounce, the highest in more than a week, at 13:30 in New York.
Monthly silver in the most actively traded COMEX3 rose 3.05 per cent, or 83.1 cents, to settle at $28.085 an ounce, the highest level since Feb. 1.
Platinum fell 0.84 per cent, or $10.80, to settle at $1282.30 an ounce in April.
Palladium rose 0.97 per cent, or $22.90, to settle at $2392.10 an ounce in March.
Among COMEX's other metals, the most actively traded three-month copper contract closed up 1.64 per cent, or 6.7 cents, at $4.141 a pound.
"We are seeing investment flows into gold because market participants are increasingly concerned that higher real interest rates could affect stock valuations," said Daniel Ghali, commodities strategist at TD Securities.
He pointed to rising yields on U.S. Treasuries.
The yield on the benchmark 10-year Treasury note hit a nearly one-year high, increasing the opportunity cost of holding non-sinister gold.
However, rising real yields and concerns about inflation have made equity valuations look overvalued by comparison, prompting investors to turn to safe-haven assets such as gold, which is widely seen as a hedge against inflation.
The dollar index fell 0.4 per cent to its lowest level in more than a month, making gold less expensive for holders of other currencies.
Eugen Weinberg, an analyst at Commerzbank, said the dollar is weak and supportive. The real reason for the rise in gold prices in the longer term is also the possibility of higher inflation.
U.S. president Joe Biden's efforts to push for a $1.9 trillion novel coronavirus aid plan went further on Friday. A House committee has released a bill that Democrats hope will be passed later next week.
The 591-page bill, compiled by the House Budget Committee, would implement Biden's proposal to provide additional funding for novel coronavirus vaccines and other medical equipment.
Investors are also watching the testimony of Federal Reserve Chairman Colin Powell on Tuesday on the semi-annual monetary policy report submitted to Congress.
The Federal Reserve and other major central banks are pinning their hopes on ultra-low interest rates to pull the economy out of the recession caused by the COVID-19 epidemic.
Ipek Oykardeskaya, a senior market analyst at Swissquote, said gold rebounded from the recent decline as "inflation concerns outweighed the sharp rise in Treasury yields."
Rhona O'Connell, a market analyst at StoneX, said the weaker dollar pushed gold back above $1800 an ounce.
