Gold / Silver / Copper futures - weekly outlook: January 19 - 23

Investing.com - Gold rallied to the highest level in more than four months on Friday, as demand for safe haven assets was boosted amid turmoil in the currency market, following the Swiss National Bank's surprise policy decision to scrap its peg against the euro.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery hit a session high of $1,292.40 a troy ounce, the most since September 2, before settling at $1,276.90, up $12.10, or 0.96%.

A day earlier, gold surged $30.30, or 2.45%, to close at $1,264.80 an ounce.

Futures were likely to find support at $1,226.10, the low from January 15, and resistance at $1,290.90, the high from September 2.

On the week, gold tacked on $60.80, or 4.76%, the second consecutive weekly gain.

Also on the Comex, silver futures for March delivery soared 64.8 cents, or 3.79%, on Friday to settle the week at $17.75 a troy ounce by close of trade, the most since September 24.

The March silver futures contract picked up $1.34, or 7.54%, on the week, the second straight weekly advance.

Gold rallied sharply after the SNB shocked the markets on Thursday, saying it would discontinue the minimum exchange rate of 1.20 per euro it imposed in September 2011.

The central bank also cut interest rates deeper into negative territory, a move intended to dissuade investors from buying the franc.

Lower interest rates can give gold a lift, as it decreases the relative cost of holding on to the metal, which doesn't offer investors any similar guaranteed payout.

The euro fell to all-time lows of 0.8696 against the franc (EUR/CHF) on Thursday and ended the week with losses of more than 17%. USD/CHF tumbled to 0.7360 on Thursday, the lowest since August 2011 and closed the week with losses of nearly 15%.

Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.

Meanwhile, mounting expectations that the European Central Bank will embark on full blown quantitative easing as soon as its next policy meeting on January 22 further supported the precious metal.

An interim ruling on January 14, which is likely to be accepted by the European Court of Justice, said the ECB was free to pursue a bond purchasing program without legal challenge.

Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.

The euro fell to lows of 1.1461 against the greenback on Friday, the weakest since November 2003.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.57% to 93.05 and notched up its fifth successive week of gains, supported by weakness in the euro.

The diverging monetary policy stance between the Federal Reserve, which is poised to raise interest rates, and central banks in Europe and Japan has seen the dollar strengthen broadly in recent months.

In the week ahead, investors will be focusing on Thursday’s outcome of the ECB’s policy meeting and the subsequent press conference with central bank governor Mario Draghi.

Elsewhere in metals trading, copper for March delivery jumped 5.9 cents, or 2.31%, on Friday to settle the week at $2.617 a pound by close of trade.

Despite Friday's gains, Comex copper lost 13.7 cents, or 4.97%, on the week, as concerns over the global economic outlook and the impact on future demand prospects dampened the appeal of the commodity.

Copper hit $2.423 a pound on January 14, a level not seen since June 2009.

Copper traders are looking ahead to a raft of Chinese economic data later this week, including reports on fourth quarter gross domestic product, as well as data on industrial production and retail sales.

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