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Gold Poised for Fifth Straight Week of Losses

December 9, 2016 at 16:24 by Andrew Moran

Gold is poised to suffer its fifth consecutive week of losses as it declines to a 10-month low. The yellow metal is shedding its value as traders get ready for a rate hike next month and new findings from a consumer sentiment survey that suggest Americans are optimistic about the future.

February gold futures tumbled $7.60, or 0.65%, to $1,164.80 per ounce at 15:00 GMT on Friday. Gold is set to post its fifth straight week of losses as it ends the trading week down nearly 1%. Gold prices are trading at their lowest levels since early February.

Silver is not doing any better. February silver futures dipped $0.08, or 0.47%, to $17.01 an ounce. Silver, however, is on track to settle the week up more than 1%.

Despite the last several weeks of losses, gold is still up nearly 20%, while silver is up close to 40%.

The precious metals are facing a beating as traders wait for the Federal Reserve to raise interest rates at next week’s Federal Open Market Committee (FOMC) meeting. According to the CME Group Fed Watch tool, there is now a near 100% likelihood that Fed Chair Janet Yellen will pull the trigger on a rate hike.

The December 13 and 14 meeting will also provide insight as to what the US central bank plans to do with rate hikes throughout 2017. Fed officials have previously predicted that it will raise rates four times next year, but nothing has been official as of yet.

When rates go up, the opportunity cost is lifted and traders flee from gold and into yield-bearing assets. Also, when the US dollar surges, as it has been doing so in 2016, commodities like gold and silver become more expensive for foreign investors.

Meanwhile, a CNBC All-America Economic Survey for the fourth quarter found that Americans are more optimistic than they have ever been since 2008. The study discovered that 42% of Americans feel the economy will get better next year, this is up 17 points from the previous quarter and is at its highest level since after Barack Obama was elected president eight years ago. Americans are optimistic in several key economic areas, including housing prices, wages, and the stock market.

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