Gold / Silver / Copper futures - weekly outlook: March 23 - 27
New York (Mar 22) Gold rallied to a two-week high on Friday, as the U.S. dollar sold off after the Federal Reserve projected a slower pace of rate hikes following its policy meeting earlier in the week.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery hit a daily peak of $1,187.40 a troy ounce, the most since March 6, before ending at $1,184.60 by close of trade, up $15.60, or 1.33% for the day.
On the week, gold jumped $26.70, or 2.79%, the biggest weekly gain since early January. Futures were likely to find support at $1,141.60, the low from March 17, and resistance at $1,200.00, the high from March 6.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled 1.4% on Friday to end at 98.05, moving further away from a 12-year high of 100.78 hit on March 13.
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 dollar's losses came after the Federal Reserve downgraded its forecasts for growth and inflation and lowered its interest rate projections, prompting investors to push back expectations on the timing and pace of future rate increases.
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.
Gold fell to a four-month low of $1,141.60 on Wednesday amid concerns that the Fed will start raising rates as early as in June.
Elsewhere on the Comex, silver futures for May delivery surged 76.9 cents, or 4.77%, on Friday to settle at $16.88 a troy ounce by close of trade, the highest level since February 26.
For the week, the May silver futures contract soared $1.25, or 8.96%, the first weekly gain in three weeks.
Also in metals trading, copper for May delivery rallied 10.1 cents, or 3.8%, on Friday to end at $2.761 a pound. Prices touched an intraday high of $2.774, the most since January 9.
Comex copper rose 9.8 cents, or 3.68%, on the week, amid speculation demand for the industrial metal will increase due to accommodative central bank policies in the U.S., Europe and China.
Meanwhile, the euro rallied above the $1.08-level against the greenback, supported by fresh hopes Greece will secure the additional bailout funds needed to avoid bankruptcy.
German Chancellor Angela Merkel said on Friday that financial aid payments to Greece could begin in tranches if the country's list of reforms was approved by its international lenders.
In the week ahead, investors will be focusing on Tuesday’s U.S. inflation report after Fed Chair Janet Yellen warned last week that the stronger dollar was pushing down consumer prices.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 23
The U.S. is to release a report on existing home sales.
Tuesday, March 24
China is to release the preliminary reading of the HSBC (LONDON:HSBA) manufacturing index.
The euro zone is to produce survey data on private sector activity, while Germany and France will also publish what will be closely watched individual reports.
The U.S. is to release a report on consumer inflation as well as data on new home sales.
Wednesday, March 25
In the euro zone, the Ifo Institute is to report on German business climate.
The U.S. is to publish data on durable goods orders.
Thursday, March 26
The U.S. is to release weekly data on initial jobless claims.
Friday, March 27
The U.S. is to round up the week with final data on fourth quarter economic growth and the revised reading of the University of Michigan consumer sentiment index.