A strong round of profit taking in Gold on Friday saw the 2-week winning streak come to an end.
Gold prices fell on Friday as many investors locked in profits and as risk appetite strengthened. However, expectations continued that gold prices could move higher next week as we get closer to the next meeting of the Federal Reserve. The yellow metal struggled to pare losses sustained earlier in the week amid falling geopolitical uncertainty, primarily in Germany. Uncertainty surrounds the future leadership position of German chancellor Angela Merkel, however concerns eased a little towards the end of the week after it was reported that Germany’s Social Democrats said it is considering talks with Angela Merkel’s Christian Democratic party to form a government.
Profit Taking Hits Gold Despite Weakening USD
Investors banked profits in Gold despite a weakening USD Gold normally trades inversely to the precious metal which is priced in US Dollars. However, taking investor focus is the upcoming meeting of the Fed, where it is highly anticipated that the Fed will raise interest rates for the third time this year. Gold is sensitive to fluctuations in US interest rates, which increase the opportunity cost of holding non-yielding assets such as Gold.
In a volatile week, gold declined approximately 0.7% whilst Silver also racked up a 0.7% decline, both ending a 2-week winning streak. Gold closed Friday down 0.32% with a troy ounce valued at $1288.04. Silver ended Friday 0.61% with a troy ounce valued at $17.008.
The US Dollar index which tracks the greenback against a basket of six weighted currencies, closed Friday down 0.34%, valuing the Dollar at $92.72
