Gold / Silver / Copper futures - weekly outlook: March 2 - 6
New York (Mar 1) Gold ended higher for the third consecutive session on Friday, as traders pushed back expectations for the timing of the first U.S. rate hike following comments made by Federal Reserve Chair Janet Yellen earlier in the week.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery inched up $3.00, or 0.25%, to settle at $1,213.10 a troy ounce by close of trade on Friday.
Futures were likely to find support at $1,200.70, the low from February 25, and resistance at $1,219.90, the high from February 26.
For the week, gold tacked on $9.50, or 0.66%, the first weekly gain in five weeks. However, prices of the precious metal lost $69.40, or 5.18%, in February, following a gain of nearly 8% in January.
Investors scaled back expectations for a mid-year rate hike after Fed chief Yellen said in testimony to the Senate Banking Committee on Tuesday that it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.
In a second day of testimony to the Financial Services Committee on Wednesday, Yellen reiterated this message, saying that wage growth and inflation must rise before the bank can hike rates, despite signs of improvement in the labor market.
Market analysts said the testimony gave the Fed more flexibility to hike rates later than June of this year.
A delay in raising interest rates would be seen as bullish for gold, as it decreases the relative cost of holding on to the metal, which doesn't offer investors any similar guaranteed payout.
Data on Friday showed that the U.S. economy grew 2.2% in the fourth quarter, down from an initial estimate of 2.6%. In the third quarter, the economy expanded at rate of 5%.
Elsewhere on the Comex, silver futures for May delivery dipped 6.6 cents, or 0.4%, on Friday to settle at $16.55 a troy ounce by close of trade.
The May silver futures contract rose 31.8 cents, or 1.67%, on the week, tracking gains in gold. For the month, however, silver futures lost 59.2 cents, or 3.8%.
Meanwhile, copper for May delivery inched down 0.3 cents, or 0.11%, on Friday to end at $2.691 a pound. On Thursday, copper rallied to $2.714, the most since January 13.
For the week, Comex copper jumped 9.0 cents, or 3.74%. Copper surged 21.2 cents, or 7.95%, in February.
Prices of the red metal have been well-supported in recent sessions amid speculation policymakers in China will introduce fresh stimulus measures to boost growth and stave off deflation in the world's second largest economy.
On Saturday, the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 5.35%.
It was the second rate cut in less than four months, indicating that Beijing is becoming more aggressive in supporting the economy as its momentum slows and deflation risks rise.
Official data released on Sunday showed that China's manufacturing purchasing managers' index rose to 49.9 in February, above expectations for a reading of 49.7 and up slightly from a two-year low of 49.8 in January.
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 turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.
Central bank policy meetings in the euro zone, U.K., Australia and Canada will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 2
China is to publish the revised reading of the HSBC manufacturing index.
The euro zone is to produce preliminary data on consumer prices and a report on unemployment.
In the U.S., the Institute of Supply Management is to report on manufacturing activity.
Tuesday, March 3
The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement.
In the euro zone, Spain is to report on the change in the number of people employed.
Wednesday, March 4
China is to publish the HSBC services index.
The Bank of Canada is to announce its benchmark interest rate and publish its rate statement.
The U.S. is to release the ADP non-farm payrolls report, which looks at private sector jobs growth. Later in the day, the ISM is to report on services sector activity.
Thursday, March 5
The Bank of England is to announce its official bank rate.
The European Central Bank is also 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 the weekly report on initial jobless claims and data on factory orders.
Friday, March 6
The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings.