Gold price clings to weekly gain, as dollar pulls back

November 17, 2017

New York (Nov 17)  Gold prices tried for back-to-back gains Friday, so far enough to salvage a narrow weekly advance as the dollar was knocked lower by the latest developments for the investigation into Russian election meddling.

December gold GCZ7, +0.29% tacked on $5.10, or 0.4%, to $1,283.20 an ounce after a see-saw week confined to mostly tight ranges. Gold futures are on track for a slim 0.3% weekly gain, at these levels. The exchange-traded SPDR Gold Trust GLD, +0.30%  was up 0.4% premarket.

Gold gained as the ICE U.S. Dollar Index DXY, -0.18%  fell 0.2% to 93.6790. The fresh bout of dollar weakness followed the report in The Wall Street Journal Thursday that special counsel Robert Mueller’s team had issued a subpoena to President Donald Trump’s campaign in mid-October.

Mueller, who is investigating whether Trump associates colluded with Russian efforts to meddle in the presidential election, requested Russia-related documents from more than a dozen top officials, the report said.

With these developments as backdrop, investors are tracking the likelihood that other policy can advance, including the Republican tax reform plan. The focus is now on the Senate after the House passed a sweeping bill to overhaul the tax code on Thursday. A revised bill moving through the Senate Finance Committee differs in key aspects from the House measure, and would delay the corporate-rate tax cut until 2019.

Tax policy and any impact on the economy is one factor under watch as financial markets sketch out the likely course for interest rates over coming months. New data remains important to monetary policy forecasts. On Friday, readings on housing starts and building permits for October are expected to be released at 8:30 a.m. Eastern Time.

Meanwhile, in a speech Thursday, Cleveland Fed President Loretta Mester said a “gradual path” for short-term interest rate increases “still remains the appropriate path of policy.”

Rising real interest rates impact the opportunity costs of holding gold because the metal provides no yield, giving investors incentive to rotate into riskier assets like stocks. Higher rates may also boost the value of the dollar which usually moves in the opposite direction of the gold price.

Read: Why it may be time to cash in on the commodity superstars of 2017

In other metals trading, December silver SIZ7, -0.01% climbed by 1 cent, or 0.1%, to $17.09 an ounce. The exchange-traded iShares Silver Trust SLV, +0.56%  added 0.1%.

Read: Silver’s bullish underpinning—it’s an essential metal for these 3 growth industries

December palladium PAZ7, +0.77%  rose $9.15 to $994.00 an ounce, after settling earlier this month at $1,015.85—the highest since February 2001. January platinum PLF8, +0.30% added 0.4% to $939.90 an ounce. December copper prices HGZ7, +0.28%  rose 0.4% to $3.06 a pound.


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