Gold Settles Lower, Records July Gain on Higher Inflation, Weaker DXY

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Gold futures will end the trading session in the red, but the yellow metal will notch both a weekly and monthly gain. Gold prices benefited from a weaker US dollar, lower Treasury yields, and climbing inflation rates, sending the precious metal to its best level in six weeks. Can bullion extend the bullish momentum?

September gold futures tumbled $14.50, or 0.79%, to $1,8616.80 per ounce at 20:05 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold will enjoy a weekly jump of 0.83% and a monthly surge of 1.64%. Year-to-date, it is still down 4.45%.

Silver, the sister commodity to gold, failed to flirt with $26 again. September silver futures fell $0.252, or 0.98%, to $25.53 an ounce. The white metal posted a weekly rally of 1.15%, but a July loss of 4%. So far this year, it is down 3.75%.

Overall, gold has advanced on multiple factors, potentially helping gold touch $1,900 sometime in the second half of 2021.

With the US annual inflation rate north of 5% and producer prices surpassing 7%, investors are bullish on gold again. While the yellow metal has been unable to mirror the meteoric gains of last summer, gold is still inching higher.

Meanwhile, the US Dollar Index (DXY), which gauges the greenback against a basket of currencies, rose 0.29% to 92.13, from an opening of 91.85. The index settled the week down 0.85% and finish the month 0.11% lower. A weaker buck is good for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

The US bond market was mostly in the red on Friday, with the benchmark 10-year Treasury yield down 0.037% to 1.232%. The one-year bill was unchanged at 0.066%, while the 30-year bond shed 0.012% to 1.904%. A drop in bonds is good for the commodities market since it reduces the opportunity cost of holding non-yielding bullion.

In other metal markets, September copper futures slid $0.0435, or 0.96%, to $4.48 per pound. September platinum futures plunged $21.70, or 2.03%, to $1,045.90 an ounce. October palladium futures tacked on $20.90, or 0.79%, to $2,664.0 an ounce.

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