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Gold Prices Mixed, Hit Two-Week Low on Stronger US Dollar

October 23, 2017 at 16:27 by Andrew Moran

Gold futures are mixed and have hit their lowest levels since the beginning of the month. The yellow metal is relatively flat on a surging US dollar, propelled by the latest Japanese election results.

December gold futures rose $0.30, or 0.02%, to $1,280.80 per ounce at 16:11 GMT on Monday. Gold prices are trading at their lowest levels since October 6. This comes as the yellow metal recorded its worst weekly performance in October last week as it dipped 1.7%.

Silver, the sister commodity to gold, is in the red to kick off the trading week. November silver futures tumbled $0.04, or 0.25%, to $17.03 an ounce. The white metal also suffered a weekly loss of 1.9% last week.

Year-to-date, gold has advanced nearly 10%, while silver has gone up around 5%.

The precious metals are being impacted by a rising US dollar as the greenback climbed 0.30%. The US dollar was given a boost following the weekend’s election results, which saw Japanese Prime Minister Shinzo Abe return to power with policies of loose monetary policy, more debt, and a weaker yen. A stronger dollar is bad for commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

Gold and silver have been victims of a surging greenback this month. Last week, the buck posted its biggest one-day gain in 2017 after the US Senate passed a budget blueprint for fiscal year 2018.

With the Federal Reserve expected to raise interest rates at December’s Federal Open Market Committee (FOMC) and domestic political turmoil subsiding, speculators have slashed their net long holdings in gold for the fifth consecutive week. Gold is generally sensitive to a rising-rate environment because it increases the opportunity cost and prompts traders into yield-bearing instruments.

Moreover, President Donald Trump is expected to announce his nomination to lead the US central bank next month. Fed Governor Jerome Powell, economist John Taylor, and former Fed Governor Kevin Warsh are the leading candidates.

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