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Gold Posts Biggest Weekly Loss in Nearly Four Months

March 3, 2017 at 18:14 by Andrew Moran

Gold futures are poised to record their biggest weekly loss in close to four months. After greater certainty pertaining to a rate hike by the Federal Reserve and growing confidence in US President Donald Trump following his speech to Congress on Tuesday, the yellow metal was hit as it posted its largest one-day decline in 2017.

April gold futures tumbled $7.00, or 0.57%, to $1,225.90 per ounce at 16:48 GMT on Friday. Not only is gold set to post its biggest weekly loss since November, it is also going to suffer its first weekly loss in the last five trading weeks. Gold shed more than 2% this week.

Silver is staying flat at the end of the trading week. May silver futures rose $0.007, or 0.04%, to $17.75 an ounce. Silver will also face a weekly loss of 3.6%, one of the few weekly losses in 2017.

Despite the decreases, gold is still up more than 6% year-to-date, while silver has also advanced nearly 10% year-to-date.

Investors are awaiting for Fed Chair Janet Yellen and Vice Chair Stanley Fischer to deliver a speech at the end of Friday. Traders are now expecting the Federal Open Market Committee (FOMC) to raise rates at its next meeting on March 14 and 15. There have also been a number of positive comments regarding a move on rates from a wide array of US central bank officials, including Federal Reserve Governor Jerome Powell, who said the case for a March rate hike “has come together.”

According to the CME Group FedWatch tool, there is a near 75% chance of a rate hike announcement this month. Although the chances of a rate hike are significantly higher than last week, the US dollar shed 0.28% against a basket of currencies.

rising-rate environment is bad for commodities like gold and silver because it lifts the opportunity cost and sends investors into yield-bearing assets. A strong dollar also makes precious metals more expensive for foreign investors to purchase.

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