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Gold Poised for Best Weekly Gain in 5 Weeks

May 19, 2017 at 16:53 by Andrew Moran

Gold futures are on track to record their best weekly gain in five weeks. With political turmoil occurring in Washington, which is impacting the US dollar, investors are seeking out safe-haven assets, including gold and silver. Traders are also worried that the new administration will be unable to fulfill its business-friendly agenda.

June gold futures dipped $0.70, or 0.06%, to $1,252.10 per ounce at 16:35 GMT on Friday. Gold is on track to post a weekly gain of roughly 2%. This would be the best week for the precious metal since the middle of April. Gold prices could not continue their winning streak as stocks rebounded on Thursday and the greenback calmed.

Silver is also poised for its best week in five weeks. July silver futures rose $0.08, or 0.48%, to $16.75 an ounce. Silver is on track to book a roughly 1% weekly advance.

Precious metals have been benefiting from chaos unfolding in the US. A special counsel has been appointed to lead a federal investigation into alleged collusion between US President Donald Trump and Russia. This comes soon after the president fired FBI director James Comey, who reportedly had a memo that said he was encouraged by the president to end a probe into Michael Flynn’s relationship with Russian officials.

The political uproar negatively affected the greenback. The US declined 0.63% and eliminated all of its post-election gains. It is trading at its lowest level in seven months. A weaker dollar is good for commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

Market expectations that the Federal Reserve would raise interest rates at next month’s Federal Open Market Committee (FOMC) meeting have somewhat diminished over the past week. According to the CME Group FedWatch tool, there is now a 73% chance that the US central bank will pull the trigger on a rate hike.

Gold was further supported by lackluster economic data coming out of China earlier this week. Since Beijing has started to wind down its economic stimulus of the last ten years, certain pockets of the market have suffered as the federal government wants to lower its debt levels.

With geopolitical tensions arising in the Middle East and East Asia, experts believe that precious metals still have some room to make significant gains this year.

If you have any questions and comments on the commodities today, use the form below to reply.

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