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Gold Rallies on Brookings Report, Capped by Rate Hike Expectations

October 10, 2017 at 16:49 by Andrew Moran

Gold futures are rallying on Tuesday on a weaker US dollar and a new Brookings Institution analysis that says President Donald Trump “likely obstructed justice” and could be impeached. The yellow metal’s gains were capped by the market’s expectations that the Federal Reserve will raise interest rates one more time this year.

December gold futures rose $8.10, or 0.63%, to $1,293.10 per ounce at 16:34 GMT on Tuesday. Gold prices are poised to post their third consecutive session gains, which comes as the yellow reported its fourth straight weekly loss last week.

Silver, the sister commodity to gold, is also surging on Tuesday. December silver futures climbed $0.20, or 1.23%, to $17.18 an ounce. The white metal is on track for a five-session win streak.

On Tuesday, the Brookings Institution, a left-wing think tank, published a 108-page report that concludes President Trump “likely obstructed justice,” which could be cause for impeachment. Brookings analysts Barry Berke, Noah Bookbinder, and Norman Eisen wrote:

Attempts to stop an investigation represent a common form of obstruction. Demanding the loyalty of an individual involved in an investigation, requesting that individual’s help to end the investigation, and then ultimately firing that person to accomplish that goal are the type of acts that have frequently resulted in obstruction convictions.

The efficacy of Brookings’s research in recent years has come to into question, plagued by pay-to-play allegations and receiving taxpayer dollars.

The precious metal also rose on a falling US dollar as the greenback tumbled 0.50%. A weaker US dollar is good for commodities like gold and silver because it makes it cheaper for foreign investors to buy.

Gold could not make any further gains because of growing expectations that the US central bank will pull the trigger on one last rate hike in 2017. The greenback has been impacted by rising geopolitical tensions, domestic turmoil, and mixed economic data. Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends traders into yield-bearing instruments.

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