Commodity Blog

Gold futures are on track to snap a two-session win streak after kicking off the trading week and month lower. The yellow metal is tumbling on Monday as geopolitical risks have simmered down for the time being. Investors are also taking a wait-and-see approach to US President Donald Trump’s tax reform plan that was short on the details.

June gold futures fell $11.60, or 0.91%, to $1,256.70 per ounce at 16:37 GMT on Monday. Gold prices are trading at a two-week low. Gold suffered a weekly loss of 1.4% last week, but managed to muster a 1.4% gain in April.

Silver is trading in the red to start the trading week. July silver futures dipped $0.29, or 1.72%, to $16.96 an ounce. Silver also recorded a weekly decline of close to 3% last week.

The precious metals are being impacted by the ease in geopolitical tensions. Following a chaotic month in Syria and North Korea, foreign political fears appeared to have cooled off, giving traders some breathing room.

Lackluster US economic data has also affected the price of gold and silver. Gold prices were trimmed following weaker-than-expected US construction spending and disappointing manufacturing figures as the ISM Manufacturing Index plunged from 57.2% to 54.8% – experts are still bullish on US manufacturing because the index remains at a healthy level.

Despite the feeble economic numbers, the US dollar climbed by 0.05% on Monday. A strong greenback is bad for dollar-denominated commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

Gold was further affected by the US government successful in averting a shutdown reminiscent of a few years ago. Congress passed a bipartisan agreement on a spending package that would keep Washington’s doors open until September 30.

Last week, the US gross domestic product (GDP) jumped a lukewarm 0.7% in the first quarter of 2017. This is down from 2.1% and 3.5% in the final two quarters of last year. A paucity of consumer spending, a decrease in government spending, and lower inventory levels were blamed for the weak January-to-March quarter.

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