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Easing North Korea Tensions Snaps Gold’s Four-Session Win Streak

August 14, 2017 at 16:43 by Andrew Moran

Gold futures are trading lower to kick off the trading week. The yellow metal’s four-session win streak may come to an end because of easing North Korea tensions and a rising US dollar. Gold prices have been surging since the beginning of August amid geopolitical risks unfolding in Asia and a declining greenback.

December gold futures tumbled $4.80, or 0.37%, to $1,289.20 per ounce at 16:24 GMT on Monday. The yellow metal has been steadily posting gains for the last four trading sessions.

Silver, the sister commodity to gold, is recording a modest rally to start the trading week. September silver futures rose $0.01, or 0.09%, to $17.08 an ounce. The white metal has also been surging this month, officially entering into green territory year-to-date.

Reports suggest that there has been an easing of tensions between Pyongyang and Washington. Some experts do say that tough rhetoric may escalate again this week because of North Korea’s Liberation Day celebration. Analysts warn that if North Korea does shoot a missile to the island of Guam then it will likely prompt investors to seek refuge in precious metals. But the heightened risks may have been simply part of the April-August pattern of the last decade.

The yellow metal has been further affected by the rising US dollar. The greenback climbed 0.30% on Monday against a basket of currencies, reversing the latest trend of falling to pre-election lows. A stronger dollar is bad for commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

Investors have been boosting their positions in gold as hedge funds and money managers increased their net long position in gold for the fourth consecutive week in the week ending August 8.

Meanwhile, weak inflation data may encourage the Federal Reserve to postpone raising interest rates until December. According to the CME Group FedWatch tool, there is a 50% chance of a December rate hike by the Federal Open Market Committee (FOMC).

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