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Gold / Silver / Copper Prices - Weekly Outlook: Jan. 28 - Feb. 1

Published 01/27/2019, 07:10 AM
Updated 01/27/2019, 07:10 AM
© Reuters.

Investing.com - This week precious metal traders will closely monitor movements in the U.S. dollar, one of the biggest factors for gold, ahead of a U.S. Federal Reserve meeting where the central bank is widely expected to leave interest rates unchanged.

As well as the Fed meeting, traders will be awaiting an expected update on U.S. fourth quarter growth on Wednesday and Friday’s U.S. government employment report for January. The ongoing trade negotiations between the U.S. and China will also be closely watched.

The Fed will conclude its two day policy meeting on Wednesday and is widely expected to hold rates steady after raising them in December for a fourth time in 2018. The U.S. central bank has indicated that it will hike rates twice this year, but some officials have recently adopted a more dovish tone.

Investors will be hoping for more clarity on the possible future path of monetary policy from Fed Chairman Jerome Powell’s post policy meeting press conference on Wednesday. Last year Powell announced that he would hold a press conference after each policy meeting, a change from the previous quarterly schedule.

On Friday, the Labor Department is to publish its nonfarm payrolls report for January, which will offer insight into the overall health of the U.S. economy and the possible impact of the partial government shutdown. The consensus forecast is for a gain of 160,000 jobs after an impressive reading in December, when the economy added 312,000 jobs.

The U.S. is scheduled to publish advance figures on fourth quarter gross domestic product on Wednesday, but the data could be delayed as a result of the recent shutdown. Meanwhile, the Institute for Supply Management will release its latest U.S. manufacturing index on Friday.

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Chinese officials are to arrive in Washington on Wednesday to continue trade talks with the U.S. aimed at resolving the long-running trade war between the two countries. Officials have until March 1 to reach a deal after which U.S. President Donald Trump has said he could move forward with fresh tariffs on Chinese imports.

The U.S. dollar fell to a more than one-week low on Friday after Trump announced a tentative agreement with lawmakers to end a partial U.S. government shutdown for three weeks.

Late Friday, the U.S. dollar index was down 0.86% at 95.47, the weakest level since Jan. 15, for a weekly decline of 0.55%. On Thursday, the index hit a three-week high of 96.37.

This made gold, which is traded in dollars, cheaper for holders of other currencies.

Gold futures settled up 1.77% at a more than seven month high of $1,302.40 on the Comex division of the New York Mercantile Exchange late Friday.

"The major catalyst supporting gold is a big drop in the dollar, amid expectations the Fed will reiterate a pause to its hiking cycle next week," said Fawad Razaqzada, an analyst with Forex.com.

Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

"There are also some rumours that the Fed is backing off their quantitative tightening program, which would mean they are going dovish. This would in turn mean a probable end of rate hikes in 2019, which would be supportive for gold," said Bob Haberkorn, senior market strategist at RJO Futures.

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Elsewhere in metals trading, silver was up 2.97% to $15.75 a troy ounce, while copper ended at $2.733 up 3.35% for the day.

Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.

Monday, January 28

The Bank of Japan is to publish the minutes of its latest policy setting meeting.

European Central Bank President Mario Draghi is to testify about the economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee, in Brussels.

Bank of England Governor Mark Carney is to speak at an event in London.

Tuesday, January 29

New Zealand is to publish trade figures.

The U.S. is to release a report on consumer confidence compiled by the Conference Board.

Wednesday, January 30

Australia is to publish inflation figures.

The U.K. is to release a report on net lending.

Germany is to release preliminary inflation numbers.

The advance estimate of U.S. fourth quarter growth is scheduled to be published, but could be delayed in the wake of the recent government shutdown.

The U.S. is to publish the ADP nonfarm payrolls report as well as data on pending home sales.

The Federal Reserve is to announce its federal funds rate and hold a press conference to discuss the monetary decision at its first meeting of the year.

Thursday, January 31

China is to publish data on manufacturing and service sector activity.

The euro zone is to release a preliminary estimate of fourth quarter growth as well as the latest unemployment figures.

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Canada is to produce figures on monthly GDP growth and raw material price inflation.

The U.S. is scheduled to release figures on personal income and spending, as well as data on the core PCE price index and a look at business activity in the Chicago region.

Friday, February 1

China is to publish its Caixin manufacturing PMI.

The U.K. is to release data on activity in its manufacturing sector.

The euro zone is to publish preliminary inflation data.

The U.S. is to round up the week with the government nonfarm payrolls report for January along with a report from the Institute of Supply Management on manufacturing activity and revised figures on consumer sentiment from the University of Michigan.

-- Reuters contributed to this report

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