Commodity Blog

Gold futures are trading flat to end the week amid political uncertainty in the US over the Republican Party’s healthcare bill. Gold prices are set to record their second consecutive weekly gain thanks to a weakening greenback and high tensions in Washington.

April gold futures rose $0.70, or 0.06%, to $1,247.90 per ounce at 17:03 GMT on Friday. Gold is poised to post a second straight weekly gain of 1.3%. Year-to-date, the yellow metal has surged nearly 8%.

Silver is rallying to finish the trading week. May silver futures jumped $0.15, or 0.86%, to $17.74 an ounce. Silver is on track to advance 1.3% for the week. Year-to-date, silver has soared more than 10%.

Gold prices are being supported by a sliding US dollar as it has fallen to a seven-week low. The greenback declined 0.04% on Friday. A weakening buck is good for commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

The yellow metal is also benefiting from the market’s concerns about US President Donald Trump being able to put forward pro-growth legislation. One of the latest hurdles the president is attempting to overcome is the GOP’s healthcare bill. President Trump is having a hard time getting the House to pass a bill that would repeal and replace the Affordable Care Act (ACA), otherwise colloquially known as Obamacare. The Republicans are split on the legislation.

Experts warn that if Trump cannot pass a healthcare bill then investors could lose faith that his administration can initiate tax reforms, cuts, and investments.

Precious metals are being impacted by recent comments by Federal Reserve officials that they could raise interest rates more than three times year. Last week, the US central bank voted in favor of hiking rates for the second time in three months. Charles Evans, James Bullard, and William Dudley are scheduled to deliver speeches on Friday to provide economic outlooks and commentary on rates.

A rising-rate environment is bad for gold because it lifts the opportunity cost and sends traders into yield-bearing assets.

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