Gold set for a 3% weekly loss; copper rebounds
San Francisco (Mar 28) Gold futures wavered between small gains and losses on Friday, holding ground below $1,300 an ounce as recent data showing a pickup in the U.S. economy helped draw some investors away from the metal and to the stock market, setting gold up for a loss of around 3% for the week.
Hopes for fresh economic stimulus in China and a continued U.S. economic recovery contributed to a further rebound for copper.
Gold futures for June delivery, which is now the most actively-traded contract, was last up by $1.20, or 0.1%, to $1,296 an ounce on the Comex division of the New York Mercantile Exchange after touching a low of $1,286.10.
Prices, based on the most-active contracts, closed on Thursday at their lowest since Feb. 11. They’re down about 3% for the week, but trade up more than 7% for the quarter so far.
Silver looked to end its nine-session losing streak, with May silver tacking on 13 cents, or 0.7%, to $19.84 an ounce, reversing course after an earlier low of $19.62.
The $1,300 level on gold was “critical support for the bulls as it was the location of a supporting trend line, both the 50-day and 200-day moving averages, as well as psychological support,” said Tyler Richey, an analyst for the 7:00’s Report, which offers daily markets commentary.
“Now, thanks in part to strong economic data, those support levels are broken and there really isn’t much support before the 100-day moving average” at $1,273.40 an ounce, he said. “It would take another ‘fear bid’ to really get the price to move higher (escalation in Ukraine, very poor economic data, etc.).”
Data released Friday showed that U.S. consumer spending rose in February at the fastest rate since November. Consumer sentiment, however, declined to a final March reading of 80, the lowest level since November.
Still, weekly jobless claims data Thursday showed a decline to the lowest level in four months and GDP figures showed that the U.S. economy’s growth in the final three months of last year bumped up to a 2.6% annual pace.
Against this backdrop, the Dow Jones Industrial Average /quotes/zigman/627449/realtime DJIA +0.23% jumped and was set for a weekly gain.
Gold “traders will be watching the several job market reports next week, with the official BLS report Friday clearly being the most important,” Richey added.
Traders have been paying close attention to the Federal Reserve’s plans to scale back its bond-buying program and eventually move to normalize monetary policy. Rising yields, meanwhile, can also make holding gold less attractive.
“The Fed’s policy expectations are certain to dominate gold trading unless geopolitical tensions resurface. We believe that expectations of rising U.S. currency yields will limit the upside in non-interest bearing gold later this year,” said Andrey Kryuchenkov, strategist at VTB Capital in London.
“The market will become increasingly sensitive to U.S. numbers until any willing buyers emerge in Asia. So far in March, Shanghai’s gold premiums have remained very subdued and there is little appetite to get in on fresh lows as far as consumer buying is concerned,” he said in a note.
Copper rebound
On Comex Friday, May high-grade copper futures /quotes/zigman/678457/realtime HGK4 +1.62% rose more than 5 cents, or 1.8%, to $3.05 a pound, with prices trading over 3% higher for the week.
Copper was slammed earlier this month on fears of a Chinese slowdown but have claimed back some losses after remarks by Chinese Premier Li Kequiang were taken as a hint the government is ready to stimulate the economy if the slowdown worsens. Read: Copper seen stuck at $3 by China’s stimulus dilemma.
Source: MarketWatch
