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Gold Rises Ahead of Fed Meeting, Set for First Gain in 10 Sessions

March 13, 2017 at 17:10 by Andrew Moran

Gold prices are on track for their first gain in 10 trading sessions as the precious metal stays above the key $1,200 threshold. The yellow metal is rising ahead of this week’s Federal Reserve meeting, where it is expected interest rates will increase, and the contentious election in The Netherlands.

April gold futures rose $3.90, or 0.32%, to $1,205.30 per ounce at 16:40 GMT on Monday. Gold has been sliding for nine consecutive sessions and has posted two straight weeks of losses. The yellow metal settled at $1,201.40 an ounce on Friday, which is the lowest since January 30.

Silver is also trying to muster up a rally to kick off the trading week. May silver futures climbed $0.08, or 0.48%, to $17.00 an ounce. Silver also recorded a weekly loss of 4.6% last week, one of the biggest weekly losses in 2017.

Gold is attempting to advance prior to the Federal Open Market Committee (FOMC) meeting on March 14 and 15. Traders widely expect Fed Chair Janet Yellen to pull the trigger on a rate hike due to positive US economic news. The Fed could be on track to raise rates two more times afterwards. Gold is sensitive to a rising-rate environment because it lifts the opportunity cost and sends traders into yield-bearing assets.

Despite gold trading in positive territory on Monday, the market is curtailing their positions in gold. According to the US Commodity Futures Trading Commission (CFTC), money managers and hedge funds reduced their net long positions in gold from the highest in three months last week.

Gold prices are also being supported by the political situation in Europe.

This week, Dutch voters head to the polls in a historic election, and the result could continue the populist uprising in Europe. The latest polls suggest that populist leader Geert Wilders, who is opposed to the European Union (EU) and floods of refugees, is tied for first place with current Prime Minister Mark Rutte, something that is bothering markets worldwide. This could provide France’s National Front leader Marine Le Pen with greater momentum.

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