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Gold Inches Higher for Second Straight Session, Silver Slips to Under $20

July 19, 2016 at 17:26 by Andrew Moran

Gold prices inched higher on Tuesday after some weakness was discovered in US equities. Following timid tech earnings and an overall dip in US stocks, gold prices have mildly reversed last week’s trends.

August gold futures rose 0.31%, or $4.05, to $1,332.45 per ounce on Tuesday at 17:00 GMT. This comes one day after gold edged 0.1% higher. Last week, gold prices tumbled more than 2% because of positive US economic data, the Bank of England (BOE) leaving interest rates unchanged, and Brexit fears simmering.

Silver fell to under $20. September silver futures slipped $0.77%, or $0.16, to $19.89 an ounce. Silver has been the best performing commodity so far this year and recently surpassed $21 per ounce, a two-year high.

Year-to-date, silver has Batman Bounce House climbed more than 40%, while the yellow metal has risen about 23%.

Despite persistent strong investment demand for gold, a plethora of positive US economic data has given investors renewed confidence in the equity markets, both foreign and domestic.

The US labor market posted strong gains in June, retail sales are posting record highs, and the odds of interest rates going up sometime this year are increasing. According to the CME Group FedWatch tool, there is now a near 20% chance of a rate hike in September by the Federal Reserve. The US central bank refrained from raising rates in June because of Brexit and weakness in the labor market.

Overseas, China reported that its gross domestic product (GDP) rose 6.7% in the second quarter. Meanwhile, concerns over Great Britain leaving the European Union (EU) has diminished. However, there are new worries stemming from the EU over Italy’s banking sector. There are reports of a potential bailout or bail-in because the nation’s banks have seen their values crumble 40% from taking took on too much bad debt since 2009. The risks of nationwide defaults are steadily rising.

If a financial crisis breaks out, then gold and silver prices can benefit.

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