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Gold Tops $1,300 on Janet Yellen Silence, Weaker US Dollar

August 28, 2017 at 16:39 by Andrew Moran

Gold futures have topped $1,300 and are surging more than 1% to kick off the trading week. The yellow metal is climbing higher on Federal Reserve Chair Janet Yellen’s silence on monetary policy during her speech last week in Jackson Hole. Gold prices are also benefiting from a weaker US dollar and weather activities in the Gulf of Mexico.

December gold futures rose $14.00, or 1.08%, to $1,311.90 per ounce at 16:23 GMT on Monday. Gold prices are trading at their highest levels since the beginning of October.

Silver, the sister commodity to gold, is also rallying to start the trading week. September silver futures jumped $0.31, or 1.82%, to $17.36 an ounce. The white metal is settling at its best point since the middle of June.

Year-to-date, gold has risen nearly 13%, while silver has advanced close to 7%.

Last week, central bankers met for the Jackson Hole retreat, where many investors expected Yellen to pontificate on monetary policy, especially when it comes to interest rates. Instead, she remained relatively quiet on the issue, causing some traders to speculate that rates will go up gradually. Meanwhile, European Central Bank (ECB) President Mario Draghi noted that his quantitative easing policies are taking shape and helping the region’s economy recover.

Gold is taking advantage of a weakening US dollar as the greenback slipped 0.5%, its lowest level since June 2015. Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

Hurricane Harvey continues to batter Texas, bringing heavy rains and flooding to the region. Reportedly, more than 30,000 residents are expected to need shelter because their homes have been destroyed. There have not been any reports of deaths. The weather event will also impact oil activities as many companies have suspended operations and reduced personnel.

This is prompting the market to dive into gold as part of a safe-haven play, selling off equities.

If you have any questions and comments on the commodities today, use the form below to reply.

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