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Gold Prices at One-Month Highs on Holiday Trade

May 29, 2017 at 16:39 by Andrew Moran

Gold futures are trading at one-month highs thanks to the soft holiday trade. The yellow metal is trading relatively flat as the US stock market is closed for Memorial Day and the greenback weakens. Investors are also weighing US President Donald Trump’s talks with other world leaders at the G7 summit.

June gold futures tumbled $1.79, or 0.14%, to $1,266.30 per ounce a 16:26 GMT on Monday. Gold prices are trading at the highest levels since the end of June. This comes as gold recorded its third straight weekly gain last week with a 1.1% jump.

Silver, the sister commodity to gold, is rallying on the holiday long weekend. July silver futures climbed $0.09, or 0.53%, to $17.41 an ounce. Silver also posted a 3.3% weekly gain last week.

Precious metals are being supported by a soft holiday trade and a lower US dollar. The greenback slipped 0.1% on Monday, trading at a six-month low. A timid dollar is good for commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

Despite a handful of gaffes, most analysts think that President Trump’s first overseas trip was successful. He pledged to his global counterparts to rail against protectionism, but noted that he has yet to agree on an international climate change pact.

Experts are also keeping an eye on national elections in the UK and Italy.

Gold’s movements have been capped by traders awaiting for further clues as to next month’s Federal Open Market Committee (FOMC) meeting. The market widely expects the Federal Reserve to raise interest rates, keeping the US central bank on track to meet its goal of three rate hikes in 2017.

The yellow metal is sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

Recent data suggest that the market is beginning to go long on gold again. According to new data from the US Commodity Futures Trading Commission (CFTC), hedge funds and money managers boosted their net long position in gold for the first time in four weeks in the week ending May 23.

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