Gold / Silver futures – Weekly Outlook: September 26 – 30
Gold prices edged lower on Friday, but notched the strongest weekly advance in almost two months after the Federal Reserve held off on raising interest rates and scaled back the number of rate hikes it expects next year.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Gold for December delivery on the Comex division of the New York Mercantile Exchange dipped $3.00, or 0.22%, to settle at $1,341.70 a troy ounce by close of trade. On Thursday, prices rallied to $1,347.80, the most since September 7.
For the week, the yellow metal ended with a gain of $31.50, or 2.34%, the best performance since the week ended July 29.
The Fed left interest rates unchanged at the conclusion of its policy meeting on Wednesday, but hinted that a hike could come in December if the job market continued to improve.
At the same time, the U.S. central bank also cut the number of rate hikes it expects next year and in 2018, according to the median projection of forecasts released with its post-meeting statement.
The Fed has policy meetings scheduled in early November and mid-December. Economists believe policymakers would avoid a rate hike in November in part because the meeting falls just days before the U.S. presidential election.
Markets are currently pricing in a 13% chance of a rate hike at November’s meeting, according to Investing.com’s Fed Rate Monitor Tool. For December, odds stood at around 55%.
The U.S. dollar index, which measures the greenback’s value against a basket of six major currencies, ended the week at 95.40, not far from the prior day’s two-week low of 94.94.
The index lost 0.75% on the week as markets remain unconvinced that U.S. policymakers intend to tighten policy in the coming months. Dollar weakness usually benefits gold, as it boosts the metal’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Also on the Comex, silver futures for December delivery declined 28.9 cents, or 1.44%, on Friday to settle at $19.81 a troy ounce. The contract rose to $20.14 on Thursday, a level not seen since September 7. On the week, silver jumped 96.5 cents, or 5.03%.
Elsewhere in metals trading, copper for December delivery eased up 0.6 cents, or 0.3%, on Friday to end at $2.201 a pound after touching a daily peak of $2.206, the most since August 2.
For the week, New York-traded copper prices surged 5.5 cents, or 1.91%, the third weekly gain in a row, amid indications that China’s economy is regaining strength and indications that global central banks will remain accommodative.
In the week ahead, market players will be turning their attention to fresh comments from Federal Reserve Chair Janet Yellen amid ongoing uncertainty over the timing of the next U.S. rate hike.
Meanwhile, investors will be focusing on a pair of speeches from European Central Bank President Mario Draghi for fresh hints on whether the ECB will step up monetary stimulus in the coming months to boost inflation and prop up the economy.
In addition, remarks by Bank of Japan Governor Haruhiko Kuroda will be eyed in wake of last week’s decision by the BOJ to modify its policy framework.
Another big event for markets could be the first U.S. presidential debate on Monday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 26
In the euro zone, the Ifo Institute is to report on German business climate. Swiss National Bank Chairman Thomas Jordan is to speak at an event in Geneva.
European Central Bank President Mario Draghi is to testify before the Committee on Economic and Monetary Affairs of European Parliament, in Brussels. Bank of Canada Governor Stephen Poloz is to speak in Washington.
The U.S. is to release data on new home sales. Later in the day, the market will turn its attention to the first televised U.S. presidential debate between Democratic nominee Hillary Clinton and Republican hopeful Donald Trump.
Tuesday, September 27
The U.S. is to release private sector data on consumer confidence. Federal Reserve Vice Chair Stanley Fischer is due to speak at an event in Washington, DC.
Wednesday, September 28
ECB President Draghi is to speak about current developments in the euro area at the German Bundestag, in Berlin.
The U.S. is to publish data on durable goods orders. Fed Chair Janet Yellen is scheduled to testify before the House Financial Services Committee on regulation and supervision, while St. Louis Fed chief James Bullard is to speak in St. Louis.
Thursday, September 29
BoJ Governor Haruhiko Kuroda is to speak in Tokyo. Germany is to publish preliminary inflation data and a report on unemployment change.
The U.S. is to publish final figures on second quarter growth, the weekly report on initial jobless claims and data on pending home sales.
Fed Chair Janet Yellen is to speak, via satellite, at an event in Kansas.
Friday, September 30
Japan is to release data on inflation and household spending. China is to publish its Caixin manufacturing index.
Germany is to release data on retail sales. The U.K. is to report on the current account and publish revised data on second quarter growth.
The euro zone is to release preliminary data on consumer inflation.
Canada is to publish data on economic growth.
The U.S. is to round up the week with data on personal income and spending, a report on business activity in the Chicago region and revised data on consumer sentiment.