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Gold Suffers First Weekly Loss in 2017

January 27, 2017 at 18:38 by Andrew Moran

Gold has posted its first weekly loss in 2017 as the yellow metal stayed flat in the last trading session of the week. Gold prices are trading under $1,200 as traders are going through the latest gross domestic product (GDP) numbers in the fourth quarter, which are helping the US dollar make minor gains on Friday.

February gold futures tumbled $2.40, or 0.20%, to $1,187.40 per ounce at 17:07 GMT on Friday. With gold declining for the fourth consecutive trading day, the yellow metal will have settled with its first weekly loss of 1.4%. With surging optimism over US President Donald Trump‘s economic plans and a rising greenback, traders dumped the safe haven asset for US equities and bonds this week.

Silver, meanwhile, is mustering up a rally to end the trading week. March silver futures rose $0.22, or 1.31%, to $17.07 an ounce. Silver is poised to suffer a weekly loss of just 0.1%.

Precious metals are recording losses based on the US economy growing at an annualized rate of 1.9% in the previous quarter, according to the Bureau of Economic Analysis (BEA). This is down from the initial projection of 2.2%.

Despite the decreases in soybean exports, increasing business investment and rising consumer spending have been providing the US economy with some momentum. Moreover, investors expected the Trump administration’s higher spending and tax cuts to enhance growth, which help stocks and industrial metals put forward a rally in 2017.

This gives the Federal Reserve enough ammunition to move forward with another hike to interest rates this year. The US central bank has planned three rate hikes this year, which some had doubts over, but with positive economic data coming in it looks like rates will be higher. A rising rate environment negatively affects gold because it lifts the opportunity cost and sends traders into yield-bearing assets.

The yellow metal was unable to make any gains because Asians buyers have taken a break. Due to the Lunar New Year holiday, many Asian traders are already off, including China, which is the top gold consumer in the world today. The Chinese markets will be closed from Monday through Thursday.

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