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Gold Falls Back to $1,300, Poised for a Small Weekly Gain

May 25, 2018 at 15:29 by Andrew Moran

Gold futures are hovering just above the crucial $1,300 threshold as the yellow metal is on track for a small weekly gain. Gold contracts may be short of activity than they normally would ahead of the upcoming Memorial Day long weekend.

June gold futures dipped $1.90, or 0.15%, to $1,302.50 per ounce at 15:05 GMT on Friday. Gold prices, which have tumbled to 2018 lows in recent trading sessions, are poised for a weekly advance of just under 1% after benefiting from a dovish Federal Reserve. Year-to-date, gold is in the red by about 1%.

Silver, the sister commodity to gold, is also falling to close the trading week. July silver futures tumbled $0.147, or 0.88%, to $16.54 an ounce. Like gold, the white metal will record a weekly jump of 0.5%, but it is down more than 3% so far this year.

Precious metals were unable to benefit from a mixed durable goods report. Last month, durable-goods orders declined 1.7%, stemming mostly from a decrease in contracts for heavy machinery and Boeing commercial airplanes, which slipped 0.8% and 29%, respectively.

The report did not impact the US dollar’s recent ascent as the currency hit fresh 2018 highs. The greenback rose 0.46% on Friday to 94.21, the buck’s highest level since the end of October 2017. A strengthening dollar is bad for commodities that are priced in dollars because it makes it more expensive for foreign investors to acquire.

Metals did find modest support earlier this week when the central bank released minutes from its May policy meeting. The Federal Open Market Committee (FOMC) did not hint a more aggressive route to raising interest rates, but the market does anticipate a rate hike next month. A rising-rate environment is generally bad for bullion because it lifts the opportunity cost and sends investors into yield-bearing assets while also boosting the buck.

Investors will pay attention to geopolitical headlines over the next several days after President Donald Trump cancelled next month’s planned summit with North Korean leader Kim Jong-un. He said that he is still willing to meet with Kim, and Pyongyang did offer a more composed response.

Other metal commodities are deep in the red. July copper futures shed $0.0175, or 0.57%, to $3.078 per pound. July platinum futures fell $13.00, or 1.42%, to $899.60 an ounce. July palladium futures slid $3.70, or 0.38%, to $963.80 per ounce.

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