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Gold Posts Second Straight Weekly Loss

March 10, 2017 at 16:43 by Andrew Moran

Gold is poised to record its second consecutive weekly loss. Positive US economic data and rising expectations of the Federal Reserve raising interest rates have hampered the yellow metal’s growth this past week.

April gold futures slipped $1.89, or 0.16%, to $1,201.30 per ounce at 15:07 GMT on Friday. Gold had initially dipped below $1,200 at the start of the trading session on stellar employment data before paring those losses. The precious metal will post a weekly loss of 2%, one week after shedding 2.5%.

Silver is also trading lower to end the trading week. May silver futures tumbled $0.07, or 0.45%, to $16.96 an ounce. Silver is also set for a weekly loss of roughly 4%.

The precious metals are still trading in positive territory in 2017. Year-to-date, gold is up nearly 4% and silver is up close to 6%.

It was reported on Friday that the US economy added 235,000 new jobs in February, according to the Bureau of Labor Statistics (BLS), beating initial expectations of 221,000. The unemployment rate dipped to 4.7%, down from 4.8% in the previous month. Other data show that average wages jumped 0.2% to $26.09 per hour, and hourly pay rose 2.8% from February 2016 to February 2017.

Stellar job numbers could not help the US dollar as the greenback fell 0.6%.

This positive economic data is likely to convince the US central bank to pull the trigger on a rate hike at next week’s Federal Open Market Committee (FOMC) meeting. According to the CME Group FedWatch tool, there is a 91% chance that the Fed will move ahead with a March rate hike.

Gold is sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets. Meanwhile, a strengthening US dollar makes commodities like gold and silver more expensive for foreign investors to purchase.

Gold prices were still supported by further accommodative monetary policy by the European Central Bank (ECB). The yellow metal was also helped by domestic and foreign political strife.

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