Weekly gold Price: The yellow metal loses its shine as stock markets rally

London (July 16)  After six weeks of gains, gold struggled over the past week as market sentiment recovered amid stronger US data and greater political stability close up of Theresa May, the new Prime Minister of the UK

Theresa May becoming Prime Minister helped to calm markets.  Gold headed for its first weekly loss for almost two months as investors regained faith in the stock markets, which curt the demand for ‘safe haven’ bullion.

The yellow metal fell by nearly 2.5% over the last week as traders and investors speculate that policy makers will do more to limit the fallout from last month’s Brexit vote.

Strong US non-farm payrolls data indicated an improving US economy, while the swift appointment of Theresa May as the UK Prime Minister limited any potential political instability, reassuring markets.

Despite the bad week, gold is still up 26% in the year to date and briefly touched a two-year on Monday.

Gold has taken advantage of low US interest rates which make non-yielding assets, like the metal, more attractive.

These low rates don’t look to change anytime soon either as, despite recent healthy economic data coming out of the US, traders see just a 6% probability of a US rate hike this month.

It also benefitted from the UK’s decision to leave the European Union as investors flocked to ‘safe haven’ precious metals while the financial markets were in turmoil.

So far in July, gold is up 1%, although fellow precious metal silver has enjoyed an excellent month so far.

The ‘devil’s metal’ as it is often referred to is up 8% this month and is holding firm around the two-year highs it hit at the end of last week.

Despite the strong start, analysts are concerned that silver imports by India look set to plunge from last year’s record highs, as jewellers battle with slowing demand and excessive inventories.

Shortly before UK market close on Friday, gold was down US$8 to US$1,327, silver was down 18c to US$20.11, and platinum was also down US20 to US$1,079.

Source: ProactiveInvestors