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Gold Tops One-Month High as US Dollar Sinks 2% in July

July 24, 2017 at 16:51 by Andrew Moran

Gold prices are on track for a seven-session win streak as the US dollar continues to tumble. With the greenback sliding and the political turmoil persisting in Washington, many investors think the Federal Reserve may delay any action on raising interest rates, which could be a boon for the yellow metal.

August gold futures rose $0.40, or 0.06%, to $1,254.60 per ounce at 16:34 GMT on Monday. The precious metal is trading at its highest level since June 23 and has advanced 8% year-to-date. Last week, gold prices climbed 2% and posted its second straight weekly gain.

Silver, the sister commodity to gold, has remain unchanged to kick off the trading week. September silver futures dipped $0.002, or 0.01%, to $16.45 an ounce. The white metal posted a 3.1% weekly advance last week.

The precious metals are benefiting from a weaker US dollar as the greenback rose a tepid 0.1%. The US dollar has tumbled as much as 2% month-to-date and is trading at its lowest level in more than a year. A weaker dollar is good for commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

Many traders believe the US central bank may pause its rate hike momentum for the time being. With the Federal Open Market Committee (FOMC) holding a policy meeting this week, it is expected that the Fed will hold off on a rate hike until at least September, possibly even into December. The Fed has raised rates three times in the last seven months. Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

Over the last couple of months, investors have gradually dumped a majority of so-called Trump trades, suggesting that they are no longer banking on the president’s agenda.

Washington was rocked last week when Press Secretary Sean Spicer resigned from his position over his rejection of President Donald Trump hiring Anthony Scaramucci as communications director. Moreover, the Republicans’ healthcare legislation does not seem to satisfy the repeal crowd, and there are still many allegations running wild on Capitol Hill of Trump-Russia collusion.

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