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Gold Set for Small Weekly Gain amid Investor Fear, Weakening US Dollar

June 23, 2017 at 15:25 by Andrew Moran

Gold futures are on track for a small weekly gain as the US dollar weakens and investors remain fearful of risky assets. The yellow metal is maintaining a three-session winning streak, buoyed by traders terrified of the economic and political instability occurring in the US and around the world.

August gold futures rose $7.00, or 0.56%, to $1,256.40 per ounce at 15:09 GMT on Friday. Gold prices are on track for a weekly increase of 0.1% and would be the first weekly gain in June. The yellow metal previously recorded back-to-back weekly losses as the greenback climbed and stocks jumped.

Silver, the sister commodity to gold, is mustering up a rally to end the trading week. July silver futures rose $0.16, or 1.01%, to $16.67 an ounce. The white metal is on track for a weekly advance of 0.4%.

Year-to-date, gold prices have risen nearly 9%, while silver prices have gained just under 4%.

The precious metals are being supported by a tumbling US dollar as the greenback shed 0.31%. A lower US dollar is good for dollar-denominated commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

Gold has also benefited from a lack of certainty in international markets. With various assets, like stocks and oil, deemed as risky by investors, traders have dived into safe-haven assets like gold and silver. The political environment, particularly in the US, UK, and Asia, has caused great concern in global markets.

Many traders are surprised by gold’s performance in the wake of the Federal Reserve’s rate hike. Last week, the Federal Open Market Committee (FOMC) voted in favor of raising interest rates for the third time in six months. At the two-day June policy meeting, the US central bank announced plans to wind down its $4.5 trillion balance sheet. Gold is usually sensitive to a rising-rate environment because it lifts the opportunity cost and sends traders into yield-bearing assets.

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