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Gold Hovers Around Five-Month High Amid Market Rout

December 10, 2018 at 18:20 by Andrew Moran

Gold futures are down to kick off the trading week, but they are hovering around their best levels in five months. The yellow metal has been gaining some momentum this month as the market expects the Federal Reserve to not be as aggressive raising interest rates as originally anticipated. With the market-wide selloff, investors might pour even more into precious metals to close the year.

February gold futures tumbled $2.80, or 0.22%, to $1,249.80 per ounce at 16:48 GMT on Monday. Gold prices notched a weekly gain of about 1% last week, bringing their year-to-date losses to under 7%. The yellow metal is also trading at its best level since July.

Silver, the sister commodity to gold, is also shedding its value to begin the trading week. March silver futures slipped $0.04, or 0.28%, to $14.65 an ounce. The white metal posted a weekly advance last week, jumping more than 1%. So far this year, silver prices have fallen around 13%.

Last week, the US government reported a weaker-than-expected jobs report that showed the economy created 155,000 jobs in November, leaving the unemployment rate unchanged at a 49-year low of 3.7%. The market had forecast 190,000 jobs. Hourly wages climbed six cents to $27.35 per hour.

With a disappointing labor report, the US central bank might hit the pause button on its planned rate hikes in 2019. Soon after Fed Chair Jerome Powell noted that rates were approaching neutral territory, investors took that as a hint that interest rates would not spike as much as anticipated just a month ago. This also suggests that the economy may not be as roaring as it did earlier this year.

The Fed will most likely raise rates at this month’s Federal Open Market Committee (FOMC) meeting. However, the real focus will be on the language used pertaining to how many rate hikes follow in 2019.

Any announcement on slowing down or pausing normalizing rates could undermine the US dollar, which has surged in 2018 amid the global trade war, heading into the new year. On Monday, the dollar soared 0.44% to 97.05 after remaining flat last week. A stronger buck is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

In other metals markets, January copper futures slid $0.037, or 1.34%, to $2.72 per pound. January platinum futures dropped $8.10, or 1.02%, to $782.30 an ounce. January palladium futures fell $11.20, or 0.96%, to $1,159.60 per ounce.

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