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Gold / Silver / Copper futures - weekly outlook: February 16 - 20

Published 15/02/2015, 15:53
© Reuters.  Gold rises on Friday but still ends the week lower
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Investing.com - Gold edged higher on Friday, as a broadly weaker U.S. dollar and ongoing uncertainty over developments in Greece boosted the appeal of the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery tacked on $6.40, or 0.52%, to settle at $1,227.10 a troy ounce by close of trade on Friday.

Futures were likely to find support at $1,216.50, the low from February 11, and resistance at $1,245.90, the high from February 10.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.06% to 94.24 late Friday to end the week down 0.5%.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

The drop in the dollar came after data on Friday showed that U.S. consumer sentiment unexpectedly deteriorated in February.

The preliminary reading of the University of Michigan’s consumer sentiment index fell to 93.6, down from January’s final reading of 98.1. Economists had forecast an unchanged figure.

The report came a day after data showing that U.S. retail sales unexpectedly fell 0.8% last month after dropping 0.9% in December, indicating that consumer spending remained sluggish at the start of the year.

The weak data prompted investors to trim back long positions in the greenback ahead of a three-day holiday weekend. U.S. markets will be closed on Monday in observance of Presidents' Day.

Meanwhile, officials from Greece and the European Union were due to hold fresh talks on Monday after discussions on a new debt deal last week ended without an agreement.

Greece’s current €240 billion bailout is due to expire on February 28 and the new Greek government does not want it extended, fuelling fears over a conflict with its creditors which could trigger the country’s exit from the euro zone.

Despite Friday's modest gains, gold lost $8.80, or 0.61%, on the week, the third straight weekly decline.

Prices touched $1,216.50 on Wednesday, the lowest level since January 9, amid ongoing expectations for the Federal Reserve to start raising interest rates as early as June.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Elsewhere on the Comex, silver futures for March delivery rallied 50.0 cents, or 2.98%, on Friday to settle at $17.29 a troy ounce by close of trade. Earlier in the day, prices hit $17.43, the highest level since February 5.

For the week, the March silver futures contract climbed 51.0 cents, or 3.59%, the first weekly gain in three weeks.

Meanwhile, copper for March delivery inched up 0.3 cents, or 0.12%, on Friday to end at $2.605 a pound by close of trade, as improving economic data from Europe boosted hopes for an increase in demand for the red metal.

Data on Friday showed that Germany’s economy, the euro zone's largest, grew 0.7% in the fourth quarter, more than double the 0.3% forecast by economists.

A separate report showed that the euro zone's economy expanded by a larger-than-expected 0.3% in the three months to December.

Europe as a region is third in global demand for the industrial metal. Copper is sensitive to the economic growth outlook because of its widespread uses across industries.

For the week, Comex copper tacked on 2.6 cents, or 0.73%, the second straight weekly gain.

In the coming week, investors will be focusing on Wednesday’s minutes of the latest Federal Reserve meeting for further indications on when the central bank may start to hike interest rates.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, February 16

Markets in the U.S. are to remain closed for the Presidents Day holiday.

Tuesday, February 17

In the euro zone, the ZEW Institute is to report on German economic sentiment.

The U.S. is to release data on manufacturing activity in New York State as well as a private sector survey of home builders.

Wednesday, February 18

Markets in China are to remain closed for a national holiday.

The U.S. is to release a string of economic reports, including data on producer prices, housing starts, building permits and industrial production. Later in the day, the Federal Reserve is to publish the minutes of its January meeting.

Thursday, February 19

Markets in China are to remain closed for a national holiday.

The European Central Bank is to publish the minutes of its January meeting.

The U.S. is to publish a report on manufacturing activity in the Philadelphia region and the weekly government figures on initial jobless claims.

Friday, February 20

Markets in China are to remain closed for a national holiday.

The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.

The U.S. is to round up the week with preliminary data on manufacturing activity.

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