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Gold, Silver Flat amid Higher Dollar, Political Uncertainty

February 21, 2017 at 18:05 by Andrew Moran

Gold and silver futures are trading flat on Tuesday amid a strengthening dollar and political uncertainty in the US and Europe. This comes as both precious metals posted another weekly gain last week.

April gold futures dipped $0.60, or 0.05%, to $1,238.50 per ounce at 16:36 GMT on Tuesday. The yellow metal was able to pare nearly all of its losses that incurred at the start of the trading session.

Silver is also remaining relatively unchanged. May silver futures rose $0.01, or 0.04%, to $18.03 an ounce. Silver has been quiet nearly the entire trading session.

The yellow metal was battered at the beginning of Tuesday’s trading session on greater expectations that the Federal Reserve was going to raise interest rates at next month’s Federal Open Market Committee (FOMC) meeting. Last week, Fed Chair Janet Yellen told the House of Representatives and Senate that three rate hikes are still penciled in for 2017, despite the political chaos developing in Washington. These events have contributed to the greenback’s rise in February as the US dollar gained about 0.06% on Tuesday.

A stronger greenback makes commodities like gold and silver more expensive for foreign investors to purchase, while rising rates lift the opportunity costs and send traders into yield-bearing assets.

Meanwhile, the precious metals were supported by the great deal of uncertainty surrounding the political situations in the US and Europe. In the US, President Donald Trump has yet to announce any major economic policies besides removing regulations, and opposition towards the administration grows more fierce. In Europe, the populist uprising is still gaining ground and the polls reflect that, including in France, where the National Front’s Marine Le Pen is the frontrunner.

The next major elections will occur in France, The Netherlands, and Germany. The populist leaders and parties, which are pledging to undermine the European Union (EU), are polling rather well much to the dismay of the establishment.

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