Aug 25, 2013 04:09 PM IST | Source:

Gold / Silver / Copper futures - Weekly outlook: August 26 - 30

Gold / Silver / Copper futures - Weekly outlook: August 26 - 30

Gold / Silver / Copper futures - Weekly outlook: August 26 - 30 - Gold futures rallied to an 11-week high on Friday, after disappointing U.S. new home sales data dampened speculation the Federal Reserve will begin to taper its bond-buying program as early as September.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

Some technical buying also contributed to gains after prices broke above key resistance levels close to the USD1,385-level, triggering a flurry of automatic buy orders amid bullish chart signals.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery surged 1.95% on Friday to settle the week at USD1,397.40 a troy ounce.

Earlier in the session gold prices hit USD1,399.80 a troy ounce, the highest level since June 7. The December contract settled up 0.05% at USD1,370.80 a troy ounce on Thursday.

Gold futures were likely to find support at USD1,351.90 a troy ounce, the low from August 20 and resistance at USD1,417.45, the high from June 7.

Gold prices added 1.5% on the week, the third consecutive weekly advance. The precious metal has rebounded nearly 16% since hitting a 34-month low of USD1,180.15 a troy ounce on June 28.

Gold spiked to the highest levels of the session after the Commerce Department said new home sales fell by 13.4% in July, the largest decline in more than three years. Analysts had expected U.S. new home sales to fall by 2% last month.

Gold traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.

Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.

The minutes of the Fed's July meeting published on Wednesday showed that officials were "broadly comfortable" with plans to scale back the bank's USD85 billion-a-month stimulus program.

However, policymakers remain divided over the timing of possible reduction, with almost all committee members agreeing that a change in the asset purchase program was not yet appropriate.

The minutes described recent U.S. economic data as 'mixed', indicating that plans to taper could be pushed back if the economy was to weaken.

The central bank is scheduled to meet September 17-18 to review the economy and assess policy.

Despite recent gains, the precious metal is still on track to post a loss of approximately 17% on the year amid concerns the Fed will start to unwind its stimulus program by the year's end.

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.

In the week ahead, investors will be looking ahead to revised data on U.S. second quarter growth, as well as reports on the housing sector and consumer confidence.

Elsewhere on the Comex, silver for September delivery rallied 3% on Friday to settle the week at USD23.73 a troy ounce, the strongest level since May 9.

On the week, silver future prices advanced 2.1%, the fifth straight weekly gain. Silver prices are up almost 24% since hitting a three-year low of USD18.19 on June 28, placing it firmly in bull-market territory.

Meanwhile, copper for September delivery rose 0.55% on Friday to close the week at USD3.348 a pound. Despite Friday's gains, the red metal shed 0.4% on the week. - offers an extensive set of professional tools for the financial markets.
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