Commodity Blog

Gold futures are firmly parked under the important $1,200 threshold as the yellow metal is poised for its worst week in more than a year. Gold is trying to find direction to close out the trading week amid the Turkish economic collapse, a US dollar in the red, and escalating global trade tensions. Overall, gold has been spiraling downwards, prompting investors to flee the precious metal since peaking in April.

December gold futures rose $1.60, or 0.14%, to $1,185.60 per ounce at 15:00 GMT on Friday. Gold prices are on track for a weekly decline of 3%, its worst weekly performance since May 2017. So far, it has been a putrid year for gold as it has plunged nearly 11%.

The sister commodity to gold, silver, has also fallen below the crucial $15 mark. September silver futures tumbled $0.05, or 0.35%, to $14.66 per ounce. The white metal is getting ready to record an even worse week, falling 4.24%. Year-to-date, silver prices are down 15%.

Precious metals have found little traction in a string of events that would typically send gold and silver higher.

The US dollar is down 0.3%, but it is still trading at its best level since June 2017. A stronger buck is bad for dollar-pegged commodities because it makes it more expensive for foreign investors to purchase. In addition to being up 5% so far this year, traders have been using the greenback as a safe-haven asset during immense volatility in emerging markets, undermining gold as a traditional safe-haven investment.

Even with the trade dispute between the US and China intensifying, causing a great deal of uncertainty, all eyes are on the dollar. This trend is causing investors to short gold prices at record levels, according to data from the US Commodity Futures Trading Commission (CFTC).

Why is the buck performing so well? The US economy is gaining a lot of momentum, especially with the gross domestic product (GDP) topping 4% in the second quarter and the labor market adding jobs and paying workers higher wages. These are all ingredients to a recipe for raising interest rates. For weeks, the market has priced in a September and December rate hike by the Federal Reserve, something that Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) have strongly hinted in recent minutes.

Markets will now look ahead to consumer sentiment for August, second-quarter services data, and several economic indicators for July.

In other metal commodities, December copper futures advanced $0.016, or 0.63%, to $2.651 per pound. September platinum futures shed $3.10, or 0.4%, to $781.4 per ounce. September palladium futures tacked on $1.80, or 0.21%, to $876.60 an ounce.

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