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Gold Inches Closer to $1,200 As Market Shorts Yellow Metal

July 23, 2018 at 14:59 by Andrew Moran

Gold futures are inching closer to $1,200 as the market continues to short the precious metal. Despite a myriad of events occurring in the world that would make gold attractive, investors are still diving into equities, nabbing rallying stocks. The last time gold prices traded at $1,200 was in January 2017.

August gold futures shed $6.90, or 0.55%, to $1,224.30 per ounce at 14:33 GMT on Monday, sending the yellow metal to a one-year low. Last week, gold posted a 1% loss, adding to its year-to-date decline of 7.21%.

Silver, the sister commodity to gold, is, too nearing multi-year lows of $15. September silver futures dropped $0.174, or 1.12%, to $15.375 an ounce. The white metal also slipped more than 2% last week, topping 10% in year-to-date losses.

According to the Commodity Futures Trading Commission (CFTC), traders have been adding to their net short positions of 26,400 contracts in the week ending July 2017. This is close to the record high that occurred at the end of 2015.

Events happening on the world stage should support metal commodities, but this has hardly been the case.

President Donald Trump slammed the Federal Reserve on Thursday, complaining that the central bank is raising interest rates and undoing all of the economic policies of his administration.

Treasury Secretary Steven Mnuchin revealed over the weekend that the US government is considering slapping tariffs on all $505 billion worth of Chinese goods that enter the US. Mnuchin also reaffirmed his commitment to an independent central bank.

Fed Chair Jerome Powell delivered his semi-annual testimony to the Senate Banking Committee and House Financial Services Committee, explaining monetary policy, his outlook on the US economy, and the normalization of interest rates.

On the foreign policy front, President Trump took to Twitter to warn Iranian President Hassan Rouhani to “NEVER, EVER THREATEN THE UNITED STATES AGAIN.”

The US dollar, which is up 0.16% to kick off the trading week, recorded a weekly loss. A weaker buck is typically beneficial for commodities priced in dollars because it makes it cheaper for foreign investors to purchase. Despite a rough start to 2018, the greenback has rallied nearly 4% since April.

In other metal commodities, September copper futures were flat at $2.75 per pound. September platinum futures rose $2.00, or 0.24%, to $831.50 an ounce. September palladium futures surged $13.10, or 1.47%, to $902.00 per ounce.

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