Gold / Silver / Copper Prices - Weekly Outlook: June 18 - 22
Washington (June 17) Federal Reserve tightening looks likely to remain a strong headwind for gold in the coming week after the precious metal tumbled on Friday to mark the lowest settlement since December, well below the psychologically important $1,300 level.
The diverging monetary policy outlook between the Federal Reserve and the European Central Bank is likely to underpin dollar demand. A stronger U.S. currency makes gold and other dollar-denominated commodities more expensive for holders of other currencies.
Gold futures for August delivery settled down $26.20 or 2.00% at $1,282.10 on the Comex division of the New York Mercantile Exchange. For the week, prices were down 1.81%.
Despite some risk aversion in markets on Friday as a trade spat between the U.S. and China escalated, precious metals traders focused on a rally in the dollar index which reached an eleven-month high, before easing slightly in late trade.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose to 95.13, a level not seen since July 2017, before pulling back to 94.80 late Friday. For the week, the index was up 1.33%, its best weekly performance in seven weeks.
Demand for the dollar was boosted after a more hawkish sounding Federal Reserve raised interest rates for the second time this year on Wednesday and indicated that it now sees two more rate increases before the years end.
Expectations for higher interest rates tend to be bearish for gold, which struggles to compete with yield-bearing assets when rates rise.
A day later the European Central Bank outlined plans to wind up its massive asset purchase program by December, but also pledged to keep interest rates unchanged until at least the middle of 2019.
The move saw the euro post its largest one day loss against the dollar since 2016, with EUR/USD tumbling 1.88%.
Elsewhere in precious metals trading, silver settled down 4.01% at $16.57 a troy ounce, for a weekly decline of 1.45%. Platinum settled at $888.20, down 2.49%, bringing the week’s losses to 2.20%.
Among base metals, copper for July delivery was down 2.61% to $3.138 in late trade for a weekly decline of 4.62%.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, June 18
Financial markets in China will be closed for a holiday.
Atlanta Fed President Raphael Bostic is to speak at an event in Savannah.
ECB President Mario Draghi is to speak at the ECB Forum on Central Banking, in Portugal.
San Francisco Fed chief John Williams is to speak at an event in New York.
Tuesday, June 19
The Reserve Bank of Australia is to publish the minutes of its latest policy setting meeting.
ECB head Mario Draghi is to speak at the second day of the central bank’s forum in Portugal.
The U.S. is to release data on building permits and housing starts.
Wednesday, June 20
ECB head Mario Draghi, along with Bank of Japan Governor Haruhiko Kuroda and Fed Chairman Jerome Powell are due to participate in a panel discussion at the ECB forum in Portugal.
The U.S. is to produce figures on existing home sales.
Thursday, June 21
New Zealand is to release data on first quarter economic growth.
The Swiss National Bank is to announce its latest monetary policy decision and hold a press conference following its policy meeting.
The UK is to report on public sector borrowing figures.
Deutsche Bundesbank President Jens Weidmann is to speak at an event in Paris.
The Bank of England is to announce its latest monetary policy decision.
The U.S. is to release the weekly jobless claims report along with data on manufacturing activity in the Philadelphia region.
BoE Governor Mark Carney is to speak at an event in London.
Friday, June 22
The euro zone is to release data on manufacturing and service sector activity.
Canada is to round up the week with reports on consumer inflation and retail sales.
Investing.com
