Gold / Silver / Copper futures - weekly outlook: March 9 - 13
New York (Mar 8) Gold plunged to the lowest level in more than three months on Friday, as robust U.S. nonfarm payrolls data boosted expectations that the Federal Reserve will start raising rates sooner rather than later.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery hit an intraday low of $1,162.90 a troy ounce, a level not seen since December 1, before ending at $1,164.30 by close of trade, down $31.90, or 2.67%.
It was the biggest one-day loss since December 2013 and helped wipe out the precious metal's gains so far this year.
For the week, gold slumped $49.50, or 4.02%, the worst weekly decline since late-October.
Futures were likely to find support at $1,141.70, the low from December 1, and resistance at $1,208.90, the high from March 5.
The Labor Department reported that the U.S. economy added 295,000 jobs in February, far more than the 240,000 forecast by economists, while the unemployment rate ticked down to 5.5% from 5.7% in January, the lowest since May 2008.
The robust jobs report fuelled expectations that the Federal Reserve will 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.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, jumped 1.39% to 97.74 late Friday, the highest since September 2003.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Meanwhile, the euro sank to an 11-year low against the dollar after European Central Bank President Mario Draghi confirmed that it will begin purchasing euro zone government bonds on Monday under its new quantitative easing program.
The combined monthly asset purchases will amount to €60 billion per month and are expected to run until September 2016.
Elsewhere on the Comex, silver futures for May delivery dropped 35.1 cents, or 2.17%, on Friday to settle at $15.80 a troy ounce by close of trade. Prices touched a daily low of $15.74, the weakest level since January 5.
The May silver futures contract lost 76.8 cents, or 4.54%, on the week, tracking weakness in gold.
Meanwhile, copper for May delivery inched slumped 4.3 cents, or 1.64%, on Friday to end at $2.609 a pound, the lowest since February 24.
For the week, Comex copper declined 9.0 cents, or 3.08% amid ongoing concerns over the health of China's economy.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
On Sunday, China reported a trade surplus of $60.6 billion in the January-February period, compared to expectations for a surplus of $10.8 billion and up from a surplus of $60.0 in January.
Exports surged 48.3% from a year earlier last month, above expectations for a 14.2% increase, while imports tumbled 20.5%, much worse than forecasts for a decline of 10.0%.
In the week ahead, markets will be watching talks on Greece by euro zone finance ministers in Brussels on Monday, while Thursday’s U.S. retail sales report will also be closely watched for further indications on the strength of the recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 9
Eurogroup finance ministers are to hold a meeting in Brussels to discuss funding options for Greece.
Tuesday, March 10
China is to release reports on consumer and producer price inflation.
Wednesday, March 11
China is to publish reports on industrial production and fixed asset investment.
Thursday, March 12
The U.S. is to produce data on retail sales and initial jobless claims.
Friday, March 13
The U.S. is to round up the week with data on producer prices and consumer sentiment.