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Gold Poised for Biggest Weekly Drop in 2018 as Greenback Recovers

February 23, 2018 at 15:18 by Andrew Moran

Gold futures are bleeding red ink to end the trading week. The yellow metal is on track for its worst weekly performance this year as the US dollar recovers and the equity market roars.

April gold futures tumbled $3.39, or 0.26%, to $1,329.30 per ounce at 14:00 GMT on Friday. Gold prices are poised for a weekly loss of 1.8%, the biggest weekly decline in 2018 and the worst since December.

The white metal is also slipping to finish the trading week. March silver futures slid $0.10, or 0.65%, to $16.48 an ounce. The sister commodity to gold is getting ready to post a weekly drop as well.

Year-to-date, gold has gone up a modest 1.5%, while silver has shed about 3% of its value.

Despite plunging to its lowest level since 2014 last week, the US dollar is slightly recovering as the greenback rose 0.27% to 89.93. The currency is set to report a 0.8% weekly gain, the second largest weekly increase this year. A strengthening greenback is bad for dollar-denominated commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

Reaction from precious metals regarding the release of the latest Federal Reserve minutes was mixed this week. The US central bank said that it anticipates higher inflation, but it warned that there is an “increased likelihood” for further interest rate hikes moving forward. The market expects a rate increase in March as well as four rate hikes throughout 2018.

Investors will comb through the remarks delivered by several Fed presidents on Friday, including New York Fed President William Dudley, San Francisco Fed President John Williams, and Boston Fed President Eric Rosengren. Earlier this week, Dallas Federal Reserve Bank President Robert Kaplan echoed Goldman Sachs that the US debt is “unsustainable” and noted that the recent tax cuts would not “moderate the path of projected US government debt growth.”

Other metals are in the red on Friday. March copper futures fell $0.05, or 1.57%, to $3.19 per pound. April platinum futures dipped $5.30, or 0.53%, to $994.40 an ounce. April palladium futures rose a tepid $3.75, or 0.36%, to $1,037.25 per ounce.

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