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Weaker US Dollar Helps Gold Post Third Straight Weekly Gain

January 13, 2017 at 16:14 by Andrew Moran

Gold is poised to record its third consecutive weekly gain, thanks in part to a weaker US dollar. Despite a pullback from seven-week highs on Friday, gold is hovering around the crucial $1,200 threshold.

February gold futures tumbled $6.80, or 0.57%, to $1,193.00 per ounce at 14:46 GMT on Friday. Gold is on track to post another 2% gain for the week, which would be the yellow metal’s third straight weekly gain. It has also traded in positive territory for seven of the last eight trading sessions.

Silver is not putting up much of a rally to finish off the trading week. February silver futures fell $0.11, or 0.65%, to $16.71 an ounce. Silver is also advancing just under 2% this week.

The US dollar declined 0.2% against a basket of currencies to end the week. This helped make commodities like gold and silver cheaper for foreign investors to purchase. The greenback has been falling ever since US President-Elect Donald Trump‘s press conference on Wednesday, which was marred in controversy.

A surging start to 2017 has dampened physical sales of the precious metals. In Asia, physical gold sales have weakened as buyers are biding their time waiting for a dip in prices. India, which is the world’s second-largest consumer of the yellow metal, saw many retail buyers postpone weddings because of the higher prices.

Meanwhile, there is still uncertainty regarding the Federal Reserve‘s intentions to raise interest rates three times this year. Due to the uncertainty surrounding Trump, the elections in Europe, Theresa May‘s Brexit plans, and the global financial markets, some are beginning to believe that the US central bank will refrain from triggering three rate hikes in 2017. An upward trend in rates is bad for gold because it lifts the opportunity cost and sends investors into yield-bearing assets.

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

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