Gold / Silver / Copper futures - weekly outlook: February 29 - March 4
New York (Feb 28) Gold prices fell sharply on Friday, as upbeat U.S. data boosted optimism over the strength of the economy and supported the case for higher interest rates, sending the dollar broadly higher.
Gold for April delivery on the Comex division of the New York Mercantile Exchange tumbled $18.40, or 1.49%, to close the week at $1,220.40 a troy ounce.
Gold’s losses came as the U.S. dollar strengthened broadly after data showed the U.S. economy grew at an annual rate of 1.0% in the three months to December, up from an initial estimate of 0.7% growth. Economists had expected fourth quarter GDP growth to be revised down to 0.4%.
Separate reports, showing personal spending, inflation and consumer sentiment all rose in January added to the view that the U.S. recovery is on track.
The likelihood of a June rate hike by the Federal Reserve jumped to 32.2% from 19.7% prior to the upbeat data, according to CME Group’s FedWatch site. Any rate hikes this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.71% on Friday to end at 98.13, the highest since February 3.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
For the week, gold prices declined $6.30, or 0.86%, the second straight weekly drop. However, prices of the yellow metal are still up nearly 15% so far this year amid indications global economic and financial headwinds could make it tough for the Fed to raise interest rates as much as it would like this year.
Also on the Comex, silver futures for March delivery sank 48.1 cents, or 3.17%, on Friday to close at $14.68 a troy ounce. On the week, silver futures slumped 67.6 cents, or 4.45%, the second consecutive weekly loss.
Elsewhere in metals trading, copper for March delivery soared 5.1 cents, or 2.49%, on Friday to end the week at $2.118 a pound. Futures rallied to an intraday peak of $2.156, a level not seen since November 16, after China’s central bank suggested there was room for more monetary measures to boost its economy.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
For the week, Comex copper prices gained 2.1 cents, or 2.07%, amid mounting expectations for further stimulus measures from central banks in Europe and Asia.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for February to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
Market players will also be looking out for data on China's manufacturing sector due on Tuesday, amid ongoing concerns over the health of the world's second biggest economy.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 29
The euro zone is to publish preliminary data on consumer price inflation and Germany is to report on retail sales.
The U.S. is to publish reports on business activity in the Chicago region and pending home sales.
Tuesday, March 1
China is to publish its official manufacturing and non-manufacturing PMIs and the Caixin manufacturing index.
In the U.S., the Institute of Supply Management is to release data on manufacturing activity.
Wednesday, March 2
The U.S. is to publish the ADP report on private sector jobs creation.
Thursday, March 3
China is to publish the Caixin non-manufacturing index.
The U.S. is to release a report on initial jobless claims, as well as data on factory orders and the ISM non-manufacturing index.
Friday, March 4
The U.S. is to round up the week with the closely watched report on nonfarm payrolls and data on the trade balance.
Source: Investing.com
