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Gold Settles Lower As Yellow Metal Posts Weekly Gain on COVID-19 Fears

July 10, 2020 at 18:42 by Andrew Moran

Gold futures are settling lower to finish the trading week, but they will record a modest weekly gain that was driven mostly by coronavirus fears. The yellow metal has been on a tear this year, surging to its best level in nine years. Analysts will be paying attention to see how gold trades in the $1,800 range. Will it begin to test $1,900, or it will hover at this value amid uncertainty?

August gold futures dipped $2.50, or 0.14%, to $1,801.20 per ounce at 18:25 GMT on Friday on the Comex division of the New York Mercantile Exchange. Gold is poised for a weekly jump of 0.8%, lifting its year-to-date surge to just below 19%.

Silver, the sister commodity to gold, is ending the trading week slightly higher. September silver futures picked up $0.088, or 0.46%, to $19.05 an ounce. The white metal advanced more than 4% this week, adding to its YTD gain of nearly 7%.

The precious metal experienced a pullback mainly because of optimism in the broader financial market. Investors were jubilant over positive developmental news regarding a COVID-19 vaccine. Stocks were largely unfazed by President Donald Trump revealing that a second US-China trade agreement is no longer a priority due to strained relations between the world’s two largest economies in the aftermath of the coronavirus pandemic.

Also, on Thursday, initial jobless claims fell to a four-month low, further adding to the positive sentiment in the overall market.

The resurgence of coronavirus cases in the US has sparked concern about the health of the national economic recovery and the possibility of another lockdown. On Thursday, the US reported another single-day high of more than 62,000 confirmed cases, bringing the total to 3.1 million infections.

A weaker dollar capped gold’s loss on Friday. The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.05% to 96.65, from an opening of 96.70. A weaker buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

The Treasury market also helped elevate gold prices this week with the benchmark 10-year bond yield sliding to its lowest level since April.

That said, gold has held steady in the $1,800 range. Analysts believe this is an important psychological point, leaving them to determine if the precious metal can remain in this area throughout renewed risk appetite and rising sentiment. The consensus on Wall Street is that gold could test $2,000 by year’s end.

In other metal markets, August copper futures rallied $0.065, or 2.25%, to $2.9025 a pound. September platinum futures shed $2.70, or 0.32%, to $844.20 per ounce. September palladium futures tacked on $24.30, or 1.24%, to $1,987.50 an ounce.

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