Investing.com - Gold futures edged higher on Friday, but still ended the week down more than 2% amid expectations the Federal Reserve will start raising interest rates at its next policy meeting in September.
Comments by Federal Reserve Vice Chairman Stanley Fischer on Friday suggested that the door was still open for a rate hike at the Fed's next meeting due to take place September 16-17.
Fischer said that the case for a rate increase in September was "pretty strong", though it was still too soon to say what the central bank might do.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.
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.
Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $11.40, or 1.02%, to end Friday's session at $1,134.00 a troy ounce.
For the week, prices of the precious metal dropped $26.20, or 2.21%, the worst weekly loss in about a month.
Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up 0.4% on Friday to close at 96.15, the strongest level since August 20.
The index rose 1.2% on the week as upbeat U.S. economic data fanned expectations that the Fed will raise interest rates next month.
Also on the Comex, silver futures for September delivery advanced 11.8 cents, or 0.82%, on Friday to settle at $14.53 a troy ounce by close of trade. Prices plunged to $13.91 on Wednesday, a level not seen since August 2009.
On the week, silver futures tumbled 81.0 cents, or 5.01%, the biggest weekly decline since mid-February.
Elsewhere in metals trading, copper for December delivery rose 1.7 cents, or 0.75%, on Friday to settle at $2.346 a pound as investors continued to monitor movements on China's volatile stock market.
The Shanghai Composite rallied 4.9% on Friday, with gains accelerating in the final half-hour of trade. Friday's rally followed a 5.4% surge on Thursday.
China's central bank boosted liquidity, cut interest rates and lowered the reserve requirement ratio for large lenders earlier this week in a bid to boost economic growth and halt a stock market rout.
The turmoil in markets began when China unexpectedly devalued the yuan on August 11, sparking fears that the economy may be slowing at a faster than expected rate.
For the week, copper prices inched up 5.2 cents, or 1.82%, as Chinese equity markets rebounded from a brutal selloff earlier in the week, easing jitters over an ongoing stock market collapse.
Prices of the red metal sank to a six-year low of $2.202 on August 24 as concerns over the health of China's economy and steep declines on Chinese stock markets dampened appetite for the red metal.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
In the week ahead, investors will be focusing on Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.
Markets will also be watching surveys of the manufacturing and service sectors, factory orders and trade data from the world’s largest economy for fresh indications on the timing of a rate hike.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, August 31
The U.S. is to release figures on manufacturing activity in the Chicago region.
Tuesday, September 1
China is to release reports on manufacturing and service sector activity from the China Federation of Logistics and Purchasing, as well as the Caixin services index and the revised reading of the Caixin manufacturing index.
In the U.S., the Institute of Supply Management is to report on manufacturing growth.
Wednesday, September 2
The U.S. is to release the monthly ADP nonfarm payrolls report, as well as data on factory orders.
Thursday, September 3
The European Central Bank is to announce its monetary policy decision. The rate announcement will be followed by a post-policy meeting press conference with President Mario Draghi.
The U.S. is to release data on the trade balance as well as weekly figures on jobless claims, while the ISM is to report on service sector growth.
Friday, September 4
The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.