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Gold Prices Decline As Dollar Improves

July 10, 2018 at 15:43 by Matt Jackson

Gold prices dropped on Tuesday, retracing Monday’s gains, as the dollar value improved. However, some analysts are predicting that a bottom could be in for the yellow metal. Silver also dropped with the stronger dollar proving to be the main catalyst driving today’s precious metal prices.

Gold prices are traditionally driven by the value of the dollar. A weaker dollar leads to investors seeking the safe haven investment of precious metals. Conversely, as the dollar gains in value, investors move their money back out of gold and into the dollar.  Continuing trade disputes and heavily criticised US foreign policy has seen the dollar dip and gold rally in the past few days, but that rally has stalled on Tuesday. The threat of potential Federal Reserve rate increases still weighs on the minds of investors, too.

President Donald Trump has started a diplomatic tour that will see him attend a NATO meeting before visiting Britain, where London Mayor, Sadiq Khan, recently agreed to allow a giant blimp depicting Trump as an orange baby in diapers to fly over London as the President arrived. The move has caused a lot of controversy in the UK, and it seems unlikely that it will pass without causing some response from the outspoken US President. Trump will also meet with Russian President, Vladimir Putin, before rounding off his trip visiting his own Scottish golf course. Trump’s diplomatic record is one filled with controversy and irritable arguments, and there is the threat that such a trip us likely to have an impact on the value of the dollar and gold.

The US Dollar Index, which measures the strength of the greenback against a basket of foreign currencies, showed the dollar value increase by 0.3% to 94.319. August gold futures, meanwhile, rose 0.4% to reach $1,254.60 an ounce on Tuesday.

September silver slipped 0.27% to $16.10 an ounce. Copper retraced most of Monday’s gains, with prices down 0.75% at $2.833 a pound. October platinum fell 1.23% to $844.40 an ounce and September palladium also fell, shedding 1.79% to reach $940 an ounce.

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