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Gold Prices - Weekly Outlook: September 17 - 21

Published 09/16/2018, 06:20 AM
Updated 09/16/2018, 06:20 AM
© Reuters.  Gold ends lower, still posts a small gain for the week - Gold prices look likely to remain under pressure this week with the prospect of higher U.S. interest rates to the front of metal traders’ minds.

The U.S. will see a relatively quiet week in terms of economic releases, with a report on the housing sector expected to draw the most attention.

Economists reckon the data will do little to alter expectations that the Federal Reserve will raise interest rates when it meets the following week.

The U.S. central bank has raised rates twice in 2018 and traders also anticipate that the Fed will increase them for a fourth time this year in December.

Market focus will also largely be attuned to the next potential steps in the tit-for-tat trade dispute between the U.S. and China.

U.S. President Donald Trump is likely to announce new tariffs on about $200 billion on Chinese imports as early as Monday, a senior administration official told Reuters on Saturday, despite Treasury Secretary Steven Mnuchin's attempts to restart trade talks with China.

U.S.-Sino trade-war fears have been simmering for months. Neither side is showing any signs of backing down, fueling worries that world's two largest economies are spiraling towards a trade war that could shake the global economy.

Investors have shunned gold despite an escalation in global trade tensions, indicating that the precious metal may be losing its safe-haven status.

Instead, market players opted to pile in to the U.S. dollar in the belief that the United States has less to lose from the dispute.

Gold futures ended lower Friday as some upbeat U.S. economic data provided support for the dollar, but carved out a modest rise for the week.

December gold fell $7.10, or 0.6%, to settle at $1,201.10 on the Comex division of the New York Mercantile Exchange.

The decline trimmed gains for the week to 70 cents. Prices had suffered losses over the previous two weeks.

Elsewhere in precious metals trading, silver futures lost 0.7% to close at $14.14 a troy ounce, the lowest settlement for a most-active contract since January 2016. The metal lost 0.2% for the week.

Among base metals, copper ended at $2.646, down 1.4% for the day, but still holding onto a weekly gain of 0.9%.

Copper prices have been hit by fears that a trade spat between the U.S. and China will act as a drag on the Chinese economy, undermining demand for metals used in construction and manufacturing.

China accounts for about half the world’s demand for copper and other industrial materials.

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

Monday, September 17

The euro area is to release revised inflation data.

The U.S. is to produce data manufacturing activity in the New York region.

Tuesday, September 18

European Central Bank President Mario Draghi is to speak at an event in Paris.

Wednesday, September 19

The Bank of Japan is to announce its benchmark interest rate and publish what will be a closely watched rate statement. The announcement is to be followed by a press conference.

The UK is to release inflation data.

The U.S. is to release reports on building permits and housing starts.

ECB President Draghi is to speak at an event in Berlin.

Thursday, September 20

The Swiss National Bank is to announce its benchmark interest rate decision.

The UK is to report on retail sales.

The U.S. is to release reports on jobless claims and manufacturing activity in the Philadelphia region.

Friday, September 21

The euro zone is to release data on manufacturing and service sector activity.

Canada is to round up the week with data on retail sales and inflation.

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