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Gold Hovers Around 2018 Lows As Investors See Downside

June 22, 2018 at 14:49 by Andrew Moran

Gold futures are trying to muster up a rally to end the trading week, but they are still hovering around their lowest levels seen this year. A lower US dollar, geopolitical tensions, and flat Treasuries could help lift the precious metal in the short-term, but investors still see a downside in gold for the of the year.

August gold futures rose $0.90, or 0.07%, to $1,271.40 per ounce at 14:21 GMT on Friday. Gold prices, trading at six-month lows, are on track for a weekly decline of about 1%. So far this month, the yellow metal is down just under 3%.

Silver, the sister commodity to gold, is inching higher to complete another week of trading. July silver futures advanced $0.08, or 0.51%, to $16.41 an ounce. The white metal is also poised for a weekly drop of roughly 1%. Silver prices have tumbled close to 5% year-to-date.

The US dollar is down 0.25% to 94.63, and the greenback will record a small weekly loss of 0.2%. However, the buck has largely been unaffected by the souring trade relations between the world’s two largest economies, as well as data that shows foreign governments are shedding US debt holdings. A strengthening currency is generally bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

Precious metals were given some breathing room this week as Treasuries have been mostly flat. Since the beginning of June, the 10-year Treasury note has climbed a meager nine basis points to 2.91%.

With the Federal Reserve raising interest rates for the seventh time since 2015, and the central bank hinting that further rate hikes could happen before the end of the year, gold might dip further. The yellow metal is typically sensitive to a rising-rate environment because it boosts the opportunity cost and sends traders into yield-bearing assets.

Other key central banks have also begun to gradually normalize their monetary policy endeavors, including the European Central Bank (ECB) which outlined a plan to unwind its quantitative easing program, though rates were left unchanged.

Other metal commodities are mixed on Friday, September copper futures were relatively flat at $3.047 per pound. September platinum futures added $6.80, or 0.79%, to $870.00 per ounce. September palladium futures tacked on $6.50, or 0.69%, to $952.10 an ounce.

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