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Gold Flat As Precious Metal Poised for Loss in August

August 31, 2020 at 13:56 by Andrew Moran

Gold futures are joining the broader financial market by kicking off the trading week flat. The precious metal is just coming off a 2% weekly gain, but it is on track for a monthly loss. Gold prices are quiet on Monday as investors weigh the next major factors that could contribute to the yellow metal’s performance, especially now that the Federal Reserve has guaranteed inflation and historically low interest rates.

August gold futures edged up $0.10, or 0.01%, to $1,974.90 per ounce at 13:35 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold prices are poised for a decline of 0.8% in August, but they are still up more than 30% year-to-date.

Silver, the sister commodity, is heading in the opposite and is getting ready to enjoy a double-digit surge in August. November silver futures picked up $0.63, or 2.3%, to $28.245 per ounce. The white metal is aiming for a 16% monthly gain, adding to its YTD spike of 58%.

Gold is on the flatline as analysts and investors start to consider factors that could contribute to the yellow metal’s performance in September. Now that the Federal Reserve has informed markets that it will allow inflation to run beyond the 2% target rate and that low interest rates are here to stay, it is unclear what else could drive gold’s movement in the short-term.

Further weakness in the greenback could fuel gold’s strong 2020 performance. On Monday, the US Dollar Index, which gauges the buck against a basket of currencies, tumbled 0.18% to 92.20. The index is coming off a 1% weekly decline, bringing its 2020 drop to 4.3%. A lower greenback is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.

But gold could come under pressure on potential improving economic activity, as well as new developments of possible coronavirus vaccines and other treatments. Some analysts believe that gold prices could slump if effective COVID-19 inoculations are brought to the market. However, with the flu season on the horizon, some health authorities fear that the US could face a coronavirus resurgence, particularly with more economies reopening and students returning to school.

In other metal markets, October copper futures rose $0.021, or 0.7%, to $3.0405 per pound. October platinum futures fell $3.50, or 0.37%, to $936.50 per ounce. October palladium futures tacked on $17.40, or 0.78%, to $2,248.89 per ounce.

If you have any questions and comments on commodities today, use the form below to reply.

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