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Gold Poised for Second Straight Weekly Gain on Weaker Dollar, Rates

September 18, 2020 at 17:06 by Andrew Moran

Gold futures are rising to close out the trading week, helping the yellow metal get on track for a second consecutive weekly gain. Volatility in the metals market has stabilized as investors weigh global inflation, a weaker US dollar, and a resurgence in the coronavirus. But can gold prices retest $2,000 again? The consensus on Wall Street is that the precious metal is still poised for big gains over the next 15 months.

December gold futures surged $15.60, or 0.8%, to $1,965.50 per ounce at 16:53 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices are on track for a weekly jump of about 1%, lifting their year-to-date gains to around 30%.

Silver, the sister commodity to gold, is also climbing to finish the trading week. October silver futures advanced $0.165, or 0.61%, to $27.265 an ounce. The white metal is also poised for a significant weekly increase of roughly 1.25%, enhancing its YTD rally to nearly 53%.

Metal commodities are finding support in a slumping greenback. The US Dollar Index, which gauges the greenback against a basket of currencies, tumbled 0.15% to 92.83, from an opening of 92.97. A weaker buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase. The index will settle the week down more than 0.5%.

Gold is also gaining on the Federal Reserve pledging to leave interest rates lower for longer. This week, the US central bank finished its two-day September Federal Open Market Committee (FOMC) policy meeting and stated that it would allow inflation to climb above its 2% target rate, while also keeping rates near zero until at least 2023. This is bullish for non-yielding bullion since low rates reduce the opportunity cost.

Metal investors are also waiting for the US government to approve a $1.5 trillion coronavirus aid bill. Republicans and Democrats are a standstill, but it is unclear if financial markets have already priced in President Donald Trump signing the legislation.

Right now, The Street is forecasting that gold prices will average $2,000 in the fourth quarter of 2020 and $2,125 in 2021.

In other metal markets, October copper futures picked up $0.0425, or 1.38%, to $3.1135 per pound. October platinum futures added $6.30, or 0.68%, to $937.20 per ounce. October palladium futures tacked on $39.70, or 1.70%, to $2,375.00.

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