Gold / Silver / Copper futures - weekly outlook: October 26 - 30

October 25, 2015

New York (Oct 25)  Gold futures declined for the third straight day on Friday, to end the week sharply lower as a broadly stronger U.S. dollar dampened the appeal of the precious metal.

Gold for December delivery on the Comex division of the New York Mercantile Exchange slumped $3.30, or 0.28%, on Friday to close at $1,162.80 a troy ounce. It earlier fell to $1,158.60, the lowest since October 13.

On Thursday, gold shed $1.00, or 0.09%. For the week, prices of the precious metal dropped $13.20, or 1.72%, halting two straight weeks of gains and the largest weekly fall since the week ended August 28.

The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rallied on Friday to close at 97.24, the highest since August 12. The greenback ended the week up 2.8%, the first weekly gain in four weeks.

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.

The dollar surged against the euro after European Central Bank President Mario Draghi signaled further monetary easing could be on deck for the euro zone as early as December. The comments came at the ECB's post-meeting press conference on Thursday.

Meanwhile, markets began to turn their attention to the Federal Reserve's policy meeting next week. Investors have been trying to gauge when the Fed will raise interest rates for the first time in nearly a decade after recent economic reports offered a mixed picture of the U.S. economy.

The timing of a Fed rate hike has been a constant source of debate in the markets in recent months. The U.S. central bank has two more scheduled policy meetings before the end of the year: next week and in December.

Also on the Comex, silver futures for December delivery shed 1.0 cent, or 0.06%, on Friday to settle at $15.82 a troy ounce by close of trade. On the week, silver futures slumped 18.8 cents, or 1.78%.

Elsewhere in metals trading, copper for December delivery tumbled 3.3 cents, or 1.41%, on Friday to settle at $2.350 a pound. For the week, copper prices declined 4.7 cents, or 2.37%, as persistent worries about future demand from top consumer China weighed.

The People's Bank of China cut its benchmark interest rate by a quarter percentage point to 4.35% on Friday, the latest in a series of measures aimed at stimulating economic activity and boosting growth.

It was the sixth rate cut over the past 12 months, fueling concerns that economic growth is weakening more than is currently expected.

The moves come several days after Chinese government data showed third-quarter economic growth slowed to 6.9%, the first time since the global financial crisis that the country’s gross domestic product has grown less than 7%.

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 Wednesday’s monetary policy announcement by the Federal Reserve for fresh indications on the timing of an initial rate hike.

Market participants will also be awaiting a preliminary estimate of third quarter growth from the U.S. on Thursday to gauge the strength of the economy.

Ahead of the coming week, has compiled a list of these and other significant events likely to affect the markets.

Monday, October 26

In the euro zone, the Ifo Institute is to report on German business climate.

The U.S. is to release data on new home sales.

Tuesday, October 27

The U.K. is to release preliminary data on third quarter economic growth.

The U.S. is to produce data on durable goods orders and consumer confidence.

Wednesday, October 28

The Federal Reserve is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

Thursday, October 29

In the euro area, Spain and Germany are to release preliminary data on inflation and Germany is to publish data on the change in the number of people unemployed.

The U.S. is to release advance data on third quarter economic growth, the weekly report on jobless claims and private sector data on pending home sales.

Friday, October 30

The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

The euro zone is to publish preliminary data on consumer inflation and unemployment and Germany is to release data on retail sales.

The U.S. is to round up the week with data on personal income and spending and a report on manufacturing activity in the Chicago region.


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