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Gold Hovers Around Lowest Settlement Since July 2017

July 13, 2018 at 15:37 by Andrew Moran

Gold futures are tumbling on Thursday as they are on track for their lowest settlement in a year. As the US dollar climbs, giving the Federal Reserve more ammunition to raise interest rates this year, and US-China trade tensions modestly ease, yellow metal prices are sliding.

August gold futures declined $3.50, or 0.28%, to $1,243.10 per ounce at 15:16 GMT on Friday. Gold prices, which are poised for a weekly loss of more than 1%, are hovering around their lowest settlement since July 2017. Over the last three months, gold has cratered 8%.

Silver, the sister commodity to gold, has fallen below the key $16 threshold. September silver futures shed $0.12, or 0.77%, to $15.86 an ounce. The white metal is also getting ready to record a weekly loss of 1.4%. Year-to-date, silver prices are down nearly 8%.

The US dollar is strengthening to finish off the trading week, rising 0.03% to 94.86. A rallying buck, which will post a weekly gain of 1%, is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

The greenback is rallying on news that trade tensions between the US and China have somewhat diminished. Treasury Secretary Steven Mnuchin said on Thursday that the US is willing to engage with China if Beijing is open to making some major changes in terms of trade. The world’s two largest economies have been imposing tit-for-tat tariffs worth billions of dollars.

With the latest events, the market is anticipating that the Federal Reserve will likely pencil in two rate hikes this year – one in September and the other in December. Gold is generally sensitive to a rising-rate environment because it boosts the opportunity cost and sends traders into yield-bearing assets, such as Treasuries. However, should inflation take off amid normalizing of rates, then gold will still be an attractive safe-haven asset.

In other metals markets, September copper futures were flat at $2.78 per pound. September platinum futures plunged $17.20, or 2.03%, to $829.20 per ounce. September palladium futures fell $16.30, or 1.72%, to $932.50 an ounce.

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