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Falling Gold Prices Threaten Weekly Gain As Traders Wait for Catalyst

November 23, 2018 at 15:39 by Andrew Moran

Gold futures are tumbling at the end of the holiday-shortened trading week. As consumers are flooding the shopping malls to take advantage of Black Friday deals, traders are taking a wait-and-see approach for the yellow metal on exchanges, biding their time for the catalyst that will send gold higher or lower.

December gold futures tumbled $3.50, or 0.29%, to $1,224.50 per ounce at 14:09 GMT on Friday. The yellow metal is on track for a weekly jump of 0.8%, but the disappointing performance in the early part of the session could threaten its weekly gains. Gold prices are also poised for a decline in 2018.

Silver, the sister commodity to gold, is plunging to finish off the week. December silver futures shed $0.23, or 1.6%, to $14.27 an ounce. The white metal is flat for the week, and it’s down 18% so far this year.

It has been difficult for gold to find a direction in recent sessions, and investors are unsure which way to bet on the precious metal. With trade tensions continuing to escalate and the Federal Reserve slowly transforming into a dove, there might be a spark in a gold rally, which could help it decrease its year-to-date losses.

While the US central bank is widely expected to raise interest rates for the fourth time in 2018, there is some consternation in the Eccles Building about normalizing monetary policy because of threats to the national economy. For now, the Fed is anticipated to pull the trigger on three rate hikes next year.

Any reversal would be bad news for the greenback, which would be good news for gold prices. A stronger buck makes dollar-pegged commodities more expensive for foreign investors to purchase. Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

On Friday, the US dollar climbed 0.37% to 96.86, making it poised for a weekly increase of 0.4%.

Overall, gold has been trading above its 50- and 100-day moving averages.

Investors will now look ahead to the G20 summit in Argentina at the end of the month. President Donald Trump and Chinese President Xi Jinping are scheduled to meet to discuss trade. This might be the catalyst that traders are looking for.

In other metals markets, December copper futures slipped $0.02, or 0.75%, to $2.77 a pound. December platinum futures fell $3.20, or 0.38%, to $847.40 per ounce. December palladium futures plunged $12.20, or 1.08%, to $1,121.00 an ounce.

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