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Gold / Silver / Copper futures - Weekly outlook: August 12 - 16

Published 08/11/2013, 06:49 AM
Updated 08/11/2013, 06:49 AM

Investing.com - Gold futures edged higher on Friday, but gains were limited amid ongoing speculation over how soon the Federal Reserve may start to pull back its asset purchase program.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery inched up 0.3% on Friday to settle the week at USD1,313.50 a troy ounce, the highest level since August 5.

Gold futures were likely to find support at USD1,272.10 a troy ounce, the low from August 7 and a three-week low and resistance at USD1,319.85, the high from August 5.

Gold prices added 0.2% on the week, the second consecutive weekly advance, after scoring a gain of 1.9% on Thursday.

The precious metal is on track to post a loss of approximately 22% on the year amid concerns the Fed will start to unwind its stimulus program by the year's end.

Comments by senior Fed officials, including the heads of the Federal Reserve Banks of Chicago and Dallas, indicated that the U.S. central bank could begin to scale back its asset purchase program as early as next month if the economy continues to pick up.

An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies.

In the week ahead, investors will be closely watching U.S. data on retail sales and consumer inflation, as well as reports from the housing and manufacturing sectors.

Investors have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.

Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.

Elsewhere on the Comex, silver for September delivery rallied 1.6% on Friday to settle the week at USD20.51 a troy ounce, the strongest level since July 22.

On the week, silver future prices added 3.2%.

Meanwhile, copper for September delivery jumped 1.6% on Friday to close the week at USD3.310 a pound, the highest since June 7. The red metal surged 4.3% on the week, the biggest weekly gain since September 2012.

Official data on Friday showed that Chinese industrial output rose significantly more-than-forecast in July and consumer price inflation remained unchanged.

Industrial production in China rose 9.7% last month, beating expectations for a 9.0% increase, while CPI remained unchanged at 2.7%.

Chinese trade data released Thursday showed that both imports and exports rose in July, easing concerns over a slowdown in the world’s second-largest economy and biggest consumer of the industrial metal.

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

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