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Gold Erases Gains Heading into Historically Weak October

September 30, 2016 at 17:22 by Andrew Moran

Gold futures have been unable to maintain any momentum. The yellow metal erased its late Thursday gains as it heads into October, a month that is usually not good for gold.

December gold futures tumbled $6.40, or 0.48%, to $1,319.60 per ounce at 16:56 GMT on Friday. Gold has been trading in the red for four of the past five trading sessions. Despite the Federal Reserve leaving interest rates unchanged, precious metals have yet to muster any substantial and consistent gains.

Silver is rallying a bit. December silver futures rose $0.10, or 0.53%, to $19.29 an ounce. Silver has also been trading mostly lower since the US central bank’s rate announcement. Silver has had moments of spikes, but, like its gold counterpart, the metal has refrained from lifting off.

Even with the weak performance as of late, gold is up more than 20% this year. Silver has soared 40% year-to-date.

The yellow metal was largely unaffected by the recent report that found US consumer spending unexpectedly dipped 0.1% in August. This is the first time in seven months that consumer spending has fallen. The same report also found that inflation is starting accelerate.

Also, the US dollar is ending the week paring its gains. It was reported that yields on US government debt declined.

With a lack of major bad news over the past week or so, the market is preparing for a December rate hike. This is troubling for gold as it is sensitive to any increase in interest rates. A rate hike would raise the opportunity cost of holding bullion, which does not produce any yield. A boost to rates would also give the greenback more momentum and make precious metals more expensive for foreign investors.

Gold investors are looking at October data to determine the historical trends of the yellow metal. Gold has averaged 0.1% in losses in October, which is its worst month.

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