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Gold Posts Small Gains After 1% Friday Drop

July 10, 2017 at 16:45 by Andrew Moran

Gold futures are posting minor gains on the first trading day of the week. The yellow metal had plunged as much as 1% on Friday after strong labor market data increased expectations of another rate hike by the US central bank.

August gold futures rose $2.00, or 0.17%, to $1,211.70 per ounce at 16:32 GMT on Monday. Gold prices are edging up from their lowest levels since March. The yellow metal is further trying to recover from its 2.6% weekly decline last week – gold has tumbled for five straight trading weeks.

Silver is also attempting to record a modest rally to kick off the trading week. September silver futures jumped $0.13, or 0.88%, to $15.56 an ounce. Last week, silver slumped to a 16-month low and suffered a weekly loss of 6.8%.

The precious metals are trying to rebound from Friday’s poor performance. With the US economy adding 222,000 jobs in June, traders are boosting their expectations that the Federal Reserve will raise interest rates for the third time this year during September’s Federal Open Market Committee (FOMC) policy meeting. Gold is sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

Markets will now be looking ahead to later this week, when Fed Chair Janet Yellen delivers her semi-annual address to US lawmakers.

Gold is benefiting from a flat US dollar as the greenback has risen just 0.02% on Monday. A weaker dollar is good for commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

It continues to be bad news for the metal commodities, though. New data show that speculative investors are reducing their precious metal trades as net long positions have tumbled for the fourth consecutive week in the week ending July 4. There are also a record number of short positions in the white metal.

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