Gold / Silver futures – Weekly outlook: June 24 – 28

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Gold and silver futures ended Friday’s session higher, as investors returned to the market to seek cheap valuations after prices fell to the lowest level since September 2010 earlier in the day. Sentiment on the precious metals was dampened amid expectations the Federal Reserve will begin to taper off its bond-buying program by the end of this year. On the Comex division of the New York Mercantile Exchange, gold futures for August delivery rose 0.75% on Friday to settle the week at USD1,295.55 a troy ounce. Earlier in the session, Comex gold prices fell to a daily low of USD1,268.75 a troy ounce, the weakest level since September 16.
For the week, gold prices lost 6.8%, the worst weekly decline since September 2011. Gold futures were likely to find support at USD1,246.20 a troy ounce, the low from September 14, 2010 and near-term resistance at USD1,310.10, the high from September 28, 2010. Gold prices plunged more than 5% on Thursday after Fed Chairman Ben Bernanke said the central bank could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014 if the economy picks up as the central bank expects. Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its bond-buying program sooner-than-expected.
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.
Indications the Fed will begin to taper asset purchases sent the U.S. dollar higher across the board. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, gained 0.75% on Friday to end at a two-week high of 82.61. A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. In the coming week, investors will be closely watching U.S. data on durable goods orders, jobless claims and consumer confidence for signs that the economic recovery is on track.
Any improvement in the U.S. economy could scale back expectations for further easing, putting upward pressure on U.S. yields and boosting the dollar. Elsewhere on the Comex, silver for July delivery rallied 2.2% on Friday to settle the week at USD20.00 a troy ounce. Despite Friday’s upbeat performance, silver future prices lost 9.15% on the week. On Thursday, Comex silver prices plunged 7.3% to hit a 33-month low of USD19.55 a troy ounce.
Meanwhile, copper for July delivery climbed 2.1% on Friday to close the week at USD3.100 a pound. Despite Friday’s gains, Comex copper prices dropped 2.95% on the week. The industrial metal fell to a 20-month low of USD3.019 a pound on Thursday, as a combination of concerns over an end to the Fed’s assets purchase program and fears over a deepening slowdown in China weighed.

Source: Bullion Bulletin

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