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Gold Rises on Weaker Dollar, Still Poised for September Loss

September 28, 2020 at 16:22 by Andrew Moran

Gold futures are rising to kick off the trading week, buoyed by a weaker US dollar and increasing coronavirus cases in many nations around the world. Despite the yellow metal’s boost on Monday, it is still on track for a monthly loss. With the US heading into the final stretch of the chaotic election season, are the precious metals the safest bet right now?

December gold futures picked up $10.80, or 0.58%, to $1,877.10 per ounce at 16:06 GMT on Monday the COMEX division of the New York Mercantile Exchange. Gold is coming off a weekly loss of about 2%, adding to its monthly decline of about 5%. Year-to-date, the yellow metal is up more than 23%.

Silver, the sister commodity to gold, is also rallying to kick off the trading week. December silver futures tacked on $0.362, or 1.57%, to $23.455 an ounce. The white metal also suffered a 5% drop last week, bringing its month-to-date slide to around 17%. But silver is still up 31% so far this year.

The biggest factor for gold’s modest gains on Monday was a slumping greenback. The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.33% to 94.33, from an opening of 94.60. The index is coming off a 1% weekly gain, and it has advanced 2.3% in September. A stronger dollar is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

Over the next month, financial markets are expected to be a bit more volatile ahead of the 2020 presidential election, so traders might be taking advantage of the discount in metals and adding to their positions.

Other geopolitical developments are fueling the jump in gold and silver prices. The UK and the European Union seem far from reaching a Brexit agreement, while the US and China tensions continue to escalate. These are positive developments for precious metals.

Concerns over the COVID-19 pandemic continue to linger in the background. In the US, the number of new infections is hovering around 30,000 to 40,000 per day. In total, the US has 7.14 million cases, with a death toll of about 205,000.

In other metal markets, November copper futures edged up $0.0125, or 0.42%, to $2.9835 per pound. November platinum futures surged $40.80, or 4.8%, to $890.00 an ounce. November palladium futures soared $54.90, or 2.47%, to $2,227.10 per ounce.

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