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Gold Plummets on French Election Fallout

April 24, 2017 at 16:55 by Andrew Moran

Gold is slipping to kick off the trading week on the fallout of Sunday’s French presidential election. The market is emitting a sigh of relief on Monday after National Front leader Marine Le Pen was unable to garner first place in the first round of voting. This did not help gold as investors were seeking safe-haven assets prior to the historic election.

June gold futures tumbled $13.00, or 1.01%, to $1,276.10 per ounce at 16:40 GMT on Monday. The precious metal suffered its first weekly loss in six weeks last week as it slid 0.1%.

Silver is trading relatively flat to start the trading week. May silver futures dipped $0.006, or 0.03%, to $17.85 an ounce. Silver also recorded a weekly loss last week.

Investors are cheering after centrist Emmanuel Macron won the first round of voting on Sunday. He will now square off against Le Pen, and early polls suggest that he maintains a substantial lead heading into May 7.

The electoral result helped boost US and European shares, and the euro was sent higher. Markets had been concerned that the populist sentiment, which has included leaving the European Union (EU), would continue its momentum following US President Donald Trump’s victory, Brexit, and Geert Wilders leading the second-largest political party in Holland.

Gold was slightly supported by a falling US dollar on Monday. The greenback decreased more than 1% against a basket of currencies. A weaker dollar is good for commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

Traders now look ahead to events occurring in the US, including the Trump administration’s soon-to-be-revealed tax reform initiative. Investors are also keeping an eye on geopolitical tensions continuing in the Middle East and East Asia. Foreign policy matters are contributing to speculators increasing their net long positions in gold to their highest levels in five months.

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