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Gold Futures Make Gains After Tepid Weekly Loss

August 15, 2016 at 17:28 by Andrew Moran

Following last week’s decline of 0.1%, gold futures are starting off the trading week strong. The yellow metal is climbing as a weak US dollar, strong gold demand, and tepid economic data are helping push up precious metals.

December gold futures increased $5.23, or 0.39%, to $1,341.03 per ounce on Monday at 16:59 GMT. Gold has been close to rising above the important $1,350-an-ounce threshold. Instead of crossing that important benchmark, the yellow metal has dropped four of the five past trading weeks.

Silver is also making gains on Monday. September silver futures rose $0.15, or 0.75%, to $19.82 an ounce. In recent trading weeks, silver has been dipping below and rising above $20, which is another often watched level by traders.

Even with the recent lackluster trading patterns, gold and silver are having a great year so far. Gold is up 23%, while silver is up about 43%.

It was reported last week by the World Gold Council (WGC) that investment demand was immense in the first half of 2016. According to the report, investment demand for gold – bars, coins, and ETFs – soared 1,063.9 metric tons. This is up 19% from the previous record set at the height of the Great Recession in the first half of 2009.

The July US retail sales reports published by the Department of Commerce on Friday disappointed analysts. US retail sales were down by 0.8% after three straight months of positive numbers. Retail sales have climbed 2.3% over the last 12 months.

Meanwhile, the US dollar weakened ahead of the minutes release from last month’s Federal Open Market Committee (FOMC) about a hike in interest rates. Investors will get a glimpse as to what Federal Reserve officials were saying about the decision to delay a rate hike and when the US central bank could possibly raise rates.

According to the CME Group FedWatch tool, there is now just a 12% chance of a September rate hike.

Dollar-denominated, non-yielding gold prices benefit from a low-rate environment because they are more attractive since other aspects of the market will not offer any yield. In a rising rate environment, though, precious metals become less alluring because gold and silver do not provide yield and make riskier assets, like oil and stocks, more attractive.

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

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