Investing.com - This week precious metal traders will be tracking movements in the U.S. dollar, one of the biggest drivers for gold and awaiting comments from a number of Federal Reserve officials, which may reinforce expectations for a pause in its rate hike cycle.
Having signaled further interest rate rises as recently as December, the Fed, at its January meeting, caught markets off guard by putting plans for further rate hikes on hold and pledging to be "patient" on further moves, citing muted inflation and rising risks to global economic growth.
Market watchers will be tuning in to remarks by Cleveland Fed President Loretta Mester on Monday and St Louis Fed President James Bullard on Friday. Fed Chairman Jay Powell is due to speak on Wednesday, but it is unclear if his remarks will address monetary policy.
Investors will also be looking ahead to President Donald Trump’s State of the Union address on Tuesday. The speech was initially scheduled for Jan. 29, but was delayed as a result of the temporary government shutdown.
Trump looks sure to keep up the pressure for the border wall and may renew calls for infrastructure spending.
Markets in China will be shut for a week for the Lunar New Year holiday, while investors will still be on the lookout for any indications that the trade spat between the U.S. and China is easing.
Gold prices slid on Friday after hitting a nine-month peak in the previous session, but still posted a second straight weekly gain, after a stronger than expected U.S. nonfarm payrolls report for January.
The report showed the U.S. economy created 304,000 new jobs, the highest in 11 months, beating forecasts for 165,000 jobs. The unemployment rate, however, rose to a seven-month peak of 4%.
Average hourly earnings rose just 0.1%, compared with expectations for a 0.3% increase.
The report indicated that the labor market remains solid, but sluggish wage inflation underlined the case for the Fed’s patient stance on further rate increases.
Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
Gold futures settled down 0.23% at $1,322.10 on the Comex division of the New York Mercantile Exchange late Friday. For the week prices rose 1.37%.
“We're seeing some buying fatigue starting to emerge. The strong rally we have seen in riskier assets has to a certain extent reduced the need for additional gold buying," Saxo Bank analyst Ole Hansen said.
"We also reached the technical level around $1,325, which has over the last year provided both support and resistance, and therefore has been taken as a level for the market to pause."
Elsewhere in metals trading, silver was down 1.0% to $15.91 a troy ounce, after rising to its highest since July 2018 at $16.19 in previous session.
Meanwhile, copper ended at $2.771, off 0.48% for the day.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, February 4
Financial markets in China will be closed for the Lunar New Year holiday.
Australia is to release data on building approvals.
The U.K. is to publish survey data on construction sector activity.
The euro zone is to release figures on producer price inflation.
The U.S. is to report on factory orders.
Cleveland Fed President Loretta Mester is to speak.
Tuesday, February 5
Markets in China will remain closed for the Lunar New Year holiday.
Australia is to release data on trade and retail sales. In addition the Reserve Bank of Australia is to announce its latest interest rate decision and publish a rate statement.
The U.K. is to release survey data on service sector activity.
The euro zone is to report on retail sales.
The Institute of Supply Management is to release data on non-manufacturing activity.
President Donald Trump will deliver the State of the Union address before Congress.
Wednesday, February 6
Markets in China will remain closed for the Lunar New Year holiday.
RBA Governor Philip Lowe is to speak at an event in Sydney.
In the euro area, Germany is to produce data on factory orders.
Canada is to publish data on building permits.
Fed Chairman Jerome Powell is to speak at an event in Washington.
Thursday, February 7
Markets in China will remain closed for the Lunar New Year holiday.
New Zealand is to release its latest employment report.
Germany is to publish figures on industrial production.
The European Union is to release its economic forecasts for the next six months.
The Bank of England is to announce its latest interest rate decision and publish a rate statement.
The U.S. is to publish the weekly report on initial jobless claims.
Friday, February 8
Markets in China will remain closed for the Lunar New Year holiday.
Japan is to release data on average cash earnings.
St. Louis President James Bullard is to speak at an event at St. Cloud State University.
Canada is to round up the week with its latest employment report.
-- Reuters contributed to this report