Gold nudges higher as investors remain cautious ahead of Fed minutes

Gold prices nudged higher, reversing some of its previous session losses as investors turned cautious ahead of the release of U.S. Federal Reserve minutes later this week.

Spot gold was trading 0.3 percent higher at $1,950.03 per ounce by 0649 GMT, having hit a low of $1862.89 on Wednesday, its lowest since July 22. Last week gold fell 4.5 percent, in its biggest decline since March as investors reassessed their positions after bullion retreated from a record peak of $2,075.28 scaled on August 7. U.S. gold futures were 0.5 percent higher at $1,960.00.

Investors await the release of the minutes from the Federal Reserve’s last policy meeting, due to be released on Wednesday, for any hints of a possible change to the policy outlook at its next review in September. Investors speculate the Fed will adopt an average inflation target, which would seek to push inflation above 2 percent for some time to make up for the years it has run below it.

The safe-haven metal's upside appears limited as investors were relieved by a delay in the review of the U.S.-China trade pact which left the deal intact. The United States and China postponed a Saturday review of their Phase 1 trade deal, citing scheduling conflicts, according to sources familiar with the plans.

U.S. Republicans and Democrats struggled to reach an agreement on the cost of fiscal stimulus measures that many investors say is necessary to prevent the economy from losing more momentum.

The dollar index failed to benefit from Friday's upbeat jobs data, as worries about a delay in U.S. fiscal stimulus kept a lid on sentiment. The U.S. Labor Department’s report showed nonfarm payrolls increased by 1.76 million in July, sharply lower than the record 4.8 million in June.

Data released earlier in the Asian session showed Japan was hit by its biggest economic contraction on record in the second quarter, while Thailand suffered its worst quarter in 22 years as the coronavirus hampered exports and activity.

The yield on benchmark 10-year U.S. debt rose almost 15 basis points last week, its sharpest weekly rise in two months. On Monday, The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.687 percent. The greenback against a basket of currencies traded 0.1 percent down at 92.99, having touched a low of 92.89 earlier, its lowest since August 7.

Market's also eye the New York Fed’s Empire manufacturing survey, due at 1230 GMT, which is expected to show a slight pullback in conditions.