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Gold Poised for Weekly Loss on Rising US Dollar, Treasury Yields

April 20, 2018 at 15:40 by Andrew Moran

Gold futures are on track for their first week loss in three weeks as a strengthening US dollar and rising Treasury yields allowed the yellow metal to suffer losses for the second consecutive trading day.

June gold futures tumbled $8.40, or 0.62%, to $1,340.40 per ounce at 15:20 GMT on Friday. Gold prices are headed for a weekly decline of about 0.6%. Year-to-date, gold is still up 2%.

Silver, the sister commodity to gold, is also sliding at the end of the trading week. May silver futures slipped $0.05, or 0.30%, to $17.19 per ounce. The white metal has surged over the last few trading sessions, allowing silver to record a weekly gain of 3.3%. The recent performance helped the precious metal enter green territory for 2018.

Investor appetite for gold this week weakened amid diminished geopolitical tensions and rising expectations for another increase to interest rates.

Gold took a hit on an advancing US dollar as the greenback rose 0.48% to 90.40. The buck is poised for a weekly boost of 0.6%. A stronger greenback is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

Since gold moves inversely to Treasury yields, the yellow metal was impacted by a rallying 10-year Treasury note, which jumped 0.77% to 2.93%. When yields move higher, it decreases the attraction to non-yielding bullion, though rising inflation can boost its appeal.

Traders will be looking ahead to next month’s Federal Open Market Committee (FOMC) policy meeting, where it is expected the US central bank will hold off on a rate hike. According to the CME Group FedWatch tool, investors are anticipating the next rate hike in June. Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends traders into yield-bearing assets.

Other metal commodities were trading lower on Friday. May copper futures were flat at $3.13 per pound. May platinum futures fell $7.10, or 0.76%, to $933.00 per ounce. May palladium futures slid $2.05, or 0.20%, to $1,024.45 an ounce.

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