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Gold Poised for Best Week Since 2016 amid Inflation Fears

February 16, 2018 at 15:56 by Andrew Moran

Gold is on track for its best weekly performance in about two years as the market is having jitters about rising inflation. Despite a strengthening US dollar, the yellow metal is trading higher during the final trading session of the week.

April gold futures rose $0.89, or 0.07%, to $1,356.20 per ounce at 14:36 GMT on Friday. Gold prices are heading for a weekly gain of roughly 3%, which is the best weekly performance since April 2016.

Silver, the sister commodity to gold, is bleeding red ink to finish the trading week. March silver futures tumbled $0.046, or 0.27%, to $16.75 an ounce. The white metal will also record a weekly gain of 1.3%.

This week, a plethora of inflation data was released, stoking fears that the Federal Reserve will pursue a more aggressive strategy to raising interest rates. The consumer-price index (CPI) edged up 0.5% in January, the core CPI brought the three-month annualized gain to 2.9%, and the producer-price index (PPI) climbed 0.4%.

Precious metals rallied even with a strengthening US dollar. On Friday, the greenback increased 0.28%, posting a 3% weekly gain, but it is still trading under 90.0. A stronger US dollar is typically bad for commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

Will the US central bank raise rates more than three times in 2018? Traders are beginning to pencil it in. According to the CME Group FedWatch tool, there is an 83% chance that the Federal Open Market Committee (FOMC) will pull the trigger on a rate hike at its March policy meeting. The market is gradually placing bets on rate hikes in June and September.

Other metals are rallying to end the trading week. March copper futures jumped $0.00925, or 0.29%, to $3.255 per pound. April platinum futures advanced $9.50, or 0.95%, to $1,010.60 an ounce. April palladium futures soared $22.15, or 2.20%, to $1,028.80 per ounce.

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