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Gold Poised for Weekly Loss on Stronger US Dollar, UK Election

June 9, 2017 at 14:32 by Andrew Moran

Gold is set for its first weekly loss since the beginning of May. The yellow metal has been tumbling as the US dollar has strengthened. Gold prices were unable to take advantage of the political turmoil unfolding in the UK after the surprising electoral results.

August gold futures slid $10.40, or 0.81%, to $1,269.10 per ounce at 14:15 GMT on Friday. Gold is poised to record a weekly loss of 0.3%. Gold prices have been on a roller coaster ride all trading week.

Silver is also in the red on the final trading session of the week. July silver futures fell $0.18, or 1.09%, to $17.22 an ounce. Silver is on track to post a weekly loss of 1.1%.

The precious metals have been affected by a rising US dollar. The greenback climbed 0.18% on Friday and has advanced nearly 1% on the week. This is the best weekly performance for the dollar since the end of March. A stronger US dollar is bad for commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

Precious metals did not benefit from the stunning election result in the UK. Conservative Prime Minister Theresa May failed at expanding her majority government. Instead, the Jeremy Corbyn-led Labor Party succeeded in limiting the prime minister’s power as she now maintains a minority government. Reports have suggested that the election results may impact Brexit proceedings.

On Wednesday, the Federal Reserve will hold its two-day Federal Open Market Committee (FOMC) policy meeting, where it is expected officials will raise interest rates for the second time this year. According to the CME Group FedWatch tool, there is a 99% chance of a rate hike. Gold is sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

Gold futures had remained relatively flat during the Senate hearing involving former FBI director James Comey. He revealed that US President Donald Trump is not under personal investigation, former Attorney General Loretta Lynch pressured him to minimize the extent of his investigation into the Hillary Clinton email probe, and called the president a liar.

If you have any questions and comments on the commodities today, use the form below to reply.

3 Responses to “Gold Poised for Weekly Loss on Stronger US Dollar, UK Election”

  1. lubelihle

    When is the right time for commodities like gold and silver to purchase


    Andriy Moraru Reply:

    When the price is low.


  2. Andrew Moran

    @lubelihle: it can really depend on multiple factors, such as what currency you are buying it in, how many positions you hold now, how you’re buying commodities (physical, ETFs, stocks, etc.), objective and what your budget is.


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