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Gold Slips to Lowest Level Since March, Posts Weekly Loss

July 7, 2017 at 17:16 by Andrew Moran

Gold futures are trading at their lowest levels since March and are on track to post a weekly loss. The yellow metal plunged at the end of the trading week after the US labor market reported solid numbers in June, pushing expectations that the US central bank will raise interest rates for a third time in 2017.

August gold futures tumbled $12.10, or 0.99%, to $1,211.50 per ounce at 17:00 GMT on Friday. Gold prices have not traded at these levels since mid-March. The yellow metal is poised to record a weekly loss of 2.6%, which would be the fifth straight weekly decline.

Silver, the sister commodity to gold, is also cratering to finish off the trading week. September silver futures dipped $0.48, or 3.02%, to $15.50 an ounce. Silver is trading at a 15-month low and will post a weekly loss of 6.8%.

Year-to-date, gold prices have risen a tepid 4.5%, while silver prices have dropped 4.75%.

The precious metals are in a free fall on Friday as investors rejuvenate their bullish positions. According to the Bureau of Labor Statistics (BLS), the US economy added 222,000 new jobs last month, the biggest increase in four months. The data further revealed that wages remained flat as hourly pay climbed just 0.2% to $26.25 an hour in June.

Investors are now placing their bets that the Federal Reserve will pull the trigger on a third rate hike this year. Most traders are expecting the Federal Open Market Committee (FOMC) to raise rates at its September meeting, according to the CME Group FedWatch Tool. Gold is sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

Gold was further impacted by a higher US dollar as the greenback rose 0.19%. A stronger dollar is bad for commodities like gold and silver because it makes it more expensive for foreign investors to buy.

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