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Gold Craters After Best Settlement in a Month, Poised for Weekly Loss

June 15, 2018 at 14:56 by Andrew Moran

Gold futures are cratering to close out the trading week. The yellow metal, despite more caution from key central banks this week and volatility in the equities market, is retreating after settling at its best level in about a month. Can gold prices pare their steep losses before the US closing bell?

August gold futures crumbled $21.50, or 1.64%, to $1,287.00 per ounce at 14:27 GMT on Friday. Gold, which had closed at its highest level since the middle of May on Thursday, is now slumping to a three-week low. The yellow metal is on track for a weekly loss of 1.2%, and it is down close to 1% so far this month.

Silver, the sister commodity to gold, is also tumbling to finish the trading week. July silver futures fell $0.48, or 2.79%, to $16.78 an ounce. The white metal is poised for a small weekly decline of 0.2%.

The move in precious metals might be surprising markets on several fronts.

The European Central Bank (ECB) confirmed that it will gradually end its quantitative easing program, but President Mario Draghi added that it will unwind its easy-money policies at a more cautious pace. The move stems from weaker economic growth forecasts, the crisis unfolding in Italy, and the brewing global trade war.

Meanwhile, the Bank of Japan (BOJ) left its monetary policy stimulus efforts relatively unchanged.

The US dollar shed 0.13% to drop to 94.75, but the greenback will post a weekly jump of 1.25%, buoyed by the Federal Reserve raising interest rates for the seventh time since December 2015 earlier this week. A strengthening buck is typically bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

President Donald Trump announced on Friday that the US government will slap a 25% tariff on $50 billion worth of Chinese imports. This prompted Beijing to confirm that it will retaliate with its own levies on US products, likely agricultural goods. The news did not encourage investors to dive into the safe-haven assets.

Other metals are experiencing a sea of red. July copper futures plunged $0.052, or 1.63%, to $3.169 per pound. July platinum futures plummeted $16.30, or 1.79%, to $894.60 an ounce. July palladium futures shed $16.80, or 1.67%, to $990.00 per ounce.

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