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Gold Poised for Worst Weekly Performance in October

October 20, 2017 at 15:19 by Andrew Moran

Gold futures are tumbling at the end of the trading week as the yellow metal is poised for its worst weekly performance this month. Gold prices are being impacted by a strengthening US dollar, buoyed by President Donald Trump succeeding in his pro-business agenda.

December gold futures dipped $5.70, or 0.44%, to $1,284.60 per ounce at 15:05 GMT on Friday. Gold prices are on track for their worst settlement since the beginning of the month. The yellow metal is also set for a weekly loss of 1.7%, the worst weekly performance so far in October.

Silver, the sister commodity to gold, is experiencing declines to finish the trading week. November silver futures dropped $0.10, or 0.58%, to $17.15 an ounce. The white metal is also poised for a weekly loss of 1.7%.

Gold did snap a three-session losing streak on Thursday after investors concentrated on the political turmoil in Spain, where the government stated that it would suspend Catalonia’s autonomy after the region’s newest leader, Carles Puigdemont, warned Catalonia would declare independence.

Precious metals are hurting from a rising US dollar as the greenback surged 0.51%. A stronger US dollar is bad for dollar-denominated commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

The greenback is soaring after the Republican-controlled Senate gave the nod to a budget proposal for the next fiscal year. This would help President Trump achieve his campaign promise of tax reform and implementing across-the-board tax cuts. After some concerns that he would be unable to accomplish his goals, traders ostensibly have renewed confidence in Trump’s pro-business agenda.

Investors do not seem to be paying much attention to the Federal Reserve’s likelihood of pulling the trigger on raising interest rates at December’s Federal Open Market Committee (FOMC). As previously reported, investors have been uncertain as to the path of the US central bank’s rate hikes in 2018. Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

The president is also expected to announce his nomination for the next Fed Chair in November. The market is betting on Fed Governor Jerome Powell.

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

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