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Gold Futures Flat After Worst Weekly Loss in 2017

May 8, 2017 at 16:51 by Andrew Moran

Gold futures are flat to start off the trading week after posting its worst weekly loss in 2017. Investors are inching away from the safe-haven asset following Emmanuel Macron’s French presidential victory on Sunday. This leaves traders concentrating on monetary policy by the US and European central banks.

June gold futures rose $0.40, or 0.03%, to $1,227.30 per ounce at 16:33 GMT on Monday. The yellow metal recorded a 3.1% weekly decline last week, the worst weekly performance since November.

Silver, gold’s sister commodity, is also trading flat to kick off the trading week. July silver futures jumped $0.01, or 0.04%, to $16.28 an ounce. Silver suffered a horrible week last week when it tumbled more than 5%.

The precious metals have shed much of their 2017 gains. Year-to-date, gold is up more than 6%, while silver has advanced nearly 2%.

Investors are dumping gold, primarily known as an investment against risk, in the wake of the French presidential election. Centrist and globalist candidate Emmanuel Macron defeated nationalist candidate Marine Le Pen in a landslide. Instead of being concerned about the pivotal country exiting the European Union (EU) and dumping the euro, investors can now hone in on monetary policy conducted by the Federal Reserve and the European Central Bank (ECB).

The Fed is expected to raise interest rates as early as next month, while the ECB is expected to veer towards normalization of monetary policy. Gold is sensitive to a rising-rate environment because it lifts the opportunity cost and sends traders to yield-bearing assets.

For the first time since March, money managers and hedge funds reduced their net-long positions in the yellow metal in the week ending May 2.

The US dollar also edged upwards by increasing 0.43% against a basket of currencies. A stronger greenback is bad for dollar-denominated commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

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