Gold extends rally as dollar wobbles, but stock gains keep metal in check

Gold futures ticked higher Monday as the dollar index slipped, building slowly on what was the yellow metal’s first weekly gain in a month last week.

February gold was up $4.20, or 0.3%, at $1,261.70 an ounce. The SPDR Gold Trust was trading 0.3% higher premarket, while the VanEck Vectors Gold Miners ETF rose 0.1%.

The dollar slipped against most other major currencies, with the ICE Dollar Index down 0.3% at 93.70. The greenback advanced on Friday on increased optimism the Republican tax bill will get approved before Christmas. Gold typically moves inversely to the dollar and stocks, as investor appetite for riskier assets tends to lure investors away from the haven of gold.

Accordingly, gold’s upside Monday was held in check in part as risk-on investment sentiment persisted, leaving major stock indexes on track for new records. Such optimism was the result of tax-policy progress.

Gold, though hitting five-month lows earlier this month, remains up about 9% for the year, underpinned by global political uncertainty around North Korea, and, more broadly, trade and security questions.

Gold prices have climbed this year despite rising U.S. interest rates, a rally in global stock markets and a jump in cryptocurrency prices—and the yellow metal has plenty of reasons to stretch its gains into 2018, according to a report from the World Gold Council.

But other strategists are making a bearish call for gold into 2018. Predicting the metal will decline below $1,000 an ounce at any point in 2018.

Thinking is that gold will decline in 2018 is derived directly from the expectation that the dollar is likely to rally in 2018, which is a better-than-even-probability event.

Among other metals, March silver gained 0.5% to $16.15 an ounce after tacking on 1.5% for last week. March copper fell 0.5% to $3.12 a pound after a weekly climb of 5.2%.

January platinum rose 1.6% to $903.50 an ounce. March palladium fell 0.4% to $1,011.20 an ounce, easing back from prices that climbed last week to levels not seen since 2001.

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