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Gold Firms Above $1,300, US Dollar Weakens to Kick off 2018

January 2, 2018 at 17:52 by Andrew Moran

Gold futures are trading well above $1,300 as the US dollar weakened and investors dive into the safe-haven asset. The yellow metal is settling at its best level in three months, buoyed by a 2% gain in the fourth quarter and an overall 14% increase in 2017.

February gold futures rose $4.10, or 0.31%, to $1,313.30 per ounce at 16:37 GMT on Tuesday. Gold prices are exceeding their 100-day moving average and are on track to settle at their highest levels since the end of September.

Silver, the sister commodity to gold, is posting modest gains to kick off the trading week and 2018. March silver futures jumped $0.03, or 0.20%, to $17.18 an ounce. The white metal finished the year with a 7% boost.

Precious metals are benefiting from a weaker US dollar as the greenback shed 0.44% on Tuesday. The US dollar is poised for the fifth consecutive loss and is trading at its worst levels in three months. A weaker greenback is a boon for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase. Last year, the dollar slid 9.8%, its biggest annual decline since 2003.

Geopolitical events, like the anti-government demonstrations in Iran, are encouraging traders to buy the metals. According to the Commodity Futures Trading Commission (CFTC), hedge funds and money managers have expended their net long positions in gold by more than 40% since the middle of December.

Despite the Federal Reserve projecting three increases to interest rates in 2018, which would negatively impact the yellow metal, gold prices are starting off the year on a high note. The US central bank raised rates three times last year, a trend that could not propel the US dollar to post-election highs.

Copper, which had a tremendous 2017 with a 30% bump, is bleeding red ink. March copper futures tumbled $0.02, or 0.76%, to $3.27 per pound.

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