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Gold Suffers Biggest One-Day Loss in February amid Higher Dollar, Equities

February 13, 2017 at 19:50 by Andrew Moran

Gold prices suffered their biggest one-day loss in February and the largest intraday declines since late January. Due to a surging US dollar, soaring equities, and greater expectations that the Federal Reserve will move ahead with hikes to interest rates, the yellow metal recorded multi-week losses.

April gold futures tumbled $7.90, or 0.64%, to $1,228.00 per ounce at 18:23 GMT on Monday. Gold prices pared losses, which were the biggest in February and the largest since January 23, incurred earlier in the day. This comes as the yellow metal recorded another weekly gain of 1.2% last week and reached a 13-week high.

Silver is also lower to kick off the trading week. March silver futures decreased $0.07, or 0.41%, to $17.86 an ounce. Silver also posted another weekly gain of 2.8% last week.

The precious metals are climbing to start off 2017. Year-to-date, gold has surged roughly 7%, while silver has risen more than 6%.

Both metals were impacted by a rising dollar and another record day in the equities market. The US dollar edged upwards because of reports that traders are raising their expectations that the US central bank will pull the trigger on rate hikes next month. However, according to the CME Group FedWatch tool, there is only a 17% chance that Fed Chair Janet Yellen will raise rates for just the third time in a decade in March.

Since commodities like gold and silver are priced in the greenback, the fluctuations can influence the price of precious metals. A surging US dollar can make precious metals more expensive for foreign investors to purchase.

Yellen is scheduled to speak before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.

Meanwhile, US equities also climbed to new highs as the S&P 500 reached a market cap of $20 trillion.

Ostensibly, the political and economic uncertainty in the US and Europe will provide support for gold in the short-term. With many experts still unsure what US President Donald Trump will do over the next year and with the populist uprising that could influence the upcoming elections in Germany, The Netherlands, and France, gold prices will continue to increase from the underlying support.

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