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Gold Poised for Third Straight Week of Gains

October 28, 2016 at 15:37 by Andrew Moran

Despite the negative news surrounding gold, the yellow metal is poised to settle for its third straight week of gains as Asian stocks ease up and traders take a wait-and-see approach soon after the release of the third-quarter gross domestic product (GDP) numbers.

December gold futures rose $3.70, or 0.29%, to $1,273.20 per ounce at 15:12 GMT on Friday. It started off the trading session in the red, but soon pared those losses soon afterwards. Gold could post its third consecutive week of gains, though it is down for the month, which is normal for the precious metal as October is a historically weak time for gold.

Silver is also putting forward a modest rally to finish up the week. December silver futures climbed $0.11, or 0.65%, to $17.75 an ounce. Silver could present a 1.5% weekly gain to end the trading week. Like its gold counterpart, silver is down nearly 8% so far this month.

Year-to-date, gold is up about 20%, while silver is up roughly 40%.

Gold was barely affected by the third-quarter GDP figures. The US economy advanced 2.9% in the July-to-September period, according to the preliminary readings by the Bureau of Economic Analysis (BEA). This is an improvement from the 1.1% and 1.2% gains in the first and second quarter.

Friday’s GDP report provides the Federal Reserve with more ammunition for an increase to interest rates in December. According to the CME Group FedWatch tool, there is now a 78% chance of a December rate hike. Traders could receive further hints pertaining to a rate hike as the Federal Open Market Committee (FOMC) meets on November 1 and 2.

The yellow metal was helped with further declines in the greenback. Gold was also boosted from decreases in Asian stocks. Physical demand in Asia, particularly in India, is aiding gold’s weekly gains, too. Investors are warning that gold could experience a selloff as the markets approach the end of the year, when the US central bank is expected to proceed with the first rate hike since December 2015.

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