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Gold Slides as US Dollar Strengthens on Quiet Trading Day

February 19, 2018 at 15:52 by Andrew Moran

Gold futures started off the trading week in the red as the US dollar strengthened, continuing last week’s momentum when it posted a 3% gain. American financial markets are closed for Presidents Day, which is making for a quiet trading session.

April gold futures tumbled $6.29, or 0.46%, to $1,349.60 per ounce at 14:34 GMT on Monday. The yellow metal finished the week 3% higher, and it settled at its best level in three weeks.

Silver, the sister commodity to gold, is also unable to create a rally. March silver futures slipped $0.07, or 0.46%, to $16.63 an ounce. The white metal posted a 1.3% weekly gain last week.

Precious metals are taking a hit on a stronger US dollar as the greenback jumped 0.31%. A higher greenback is bad for dollar-denominated commodities like gold and silver because it makes it more expensive for foreign investors to buy. Year-to-date, the dollar has shed 3% of its value.

Because of the US holiday, there will not be any economic releases. That said, investors will continue to pay close attention to any inflation statistics – the higher consumer-price index (CPI) and the producer-price index (PPI) caused jitters throughout the financial markets this month, helping gold and silver soar.

With rising inflation, traders are beginning to anticipate and price in more than three increases to interest rates. The Federal Reserve will hold its next policy meeting in March, and the market overwhelmingly expects a rate hike, according to the CME Group FedWatch tool. The US central bank projected three rate hikes last year, but with advancing price inflation, Fed Chair Jerome Powell may need to be more aggressive.

Other metals are sliding to kick off the trading week. March copper futures fell $0.05, or 1.57%, to $3.19 per pound. April platinum futures dipped $1.40, or 0.14%, to $1,010.50 an ounce. April palladium futures dropped $8.65, or 0.84%, to $1,027.10 per ounce.

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