Gold notches a gain for a second day as strong dollar pauses its climb

Gold notched a second session gain in a row Monday as the highflying dollar cooled and the yellow metal came off its sixth weekly decline in the past seven.

December gold GCZ7, -0.10% tacked on $5.90, or 0.5%, to settle at $1,277.70 an ounce. Gold’s finish at $1,269.60 last Thursday was the lowest since Aug. 8, according to FactSet data, before a mild rebound on Friday. That handed the metal a loss of around 0.6% for last week. The SPDR Gold Trust GLD, +0.19%  traded up 0.3% Monday after a 0.7% loss last week.

The ICE U.S. Dollar Index DXY, +0.06%  was down 0.3% at 94.598. This closely tracked dollar index climbed to a more than three-month high Friday as more signs emerged for progress on President Trump’s promised tax cuts, a factor that has rallied the U.S. currency and driven stocks to record highs, depressing gold’s price.

Attention remains on special counsel Robert Mueller’s election-meddling probe and any perceived setback from it to the tax-reform agenda that has helped stocks and the dollar could support gold.

On Friday, the dollar index had pared gains and gold recovered somewhat after a report from Bloomberg said President Donald Trump is leaning toward appointing Fed Gov. Jerome Powell to be the next chairman of the central bank. Powell and Stanford economist John Taylor have been seen as the two front-runners for the top Fed job. Trump is expected to announce his choice this week, at least before starting a trip to Asia on Nov. 3.

That sentiment held for the dollar and gold to start the new trading week.

“Expectations that he may choose Fed Gov. Jerome Powell have been weakening the dollar, since Powell is seen as more dovish than the other major candidate, academic John Taylor,” said Marshall Gittler, chief strategist at ACLS Global.

“There has been speculation that perhaps Trump will appoint one to the chair and the other to the vice chair position, a compromise that might work out well – and probably would boost the dollar, in my view,” added Gittler.

Meanwhile, the benchmark 10-year Treasury yield TMUBMUSD10Y, -0.31%  moved lower after the report that Trump favors Powell as Fed chief. Gold, which doesn’t bear interest, typically moves in the opposite direction to U.S. bond yields.

Among other metals, December silver SIZ7, -0.01%  settled at $16.847 an ounce, up 0.6% after logging a weekly loss of 1.9%. The iShares Silver Trust SLV, +0.00% traded nearly flat.

December copper HGZ7, -0.21%  gained 0.3% to $3.112 a pound, after it was down about 2% on the week through Friday. January platinum PLF8, +0.21%  settled up 0.9% at $922.70 an ounce, and December palladium PAZ7, +0.60%  gained 0.5% to $962.65 an ounce.

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