Investing.com - Gold futures continued to recover from heavy losses suffered earlier in the week on Friday, ending the session at a one-week high amid renewed hopes for further easing from the Federal Reserve and as traders closed out bets on lower prices after futures moved in to oversold territory.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery settled at USD1,592.85 a troy ounce by close of trade on Friday.
Earlier in the day, prices hit USD1,597.35 a troy ounce, the highest since May 10. Prices tumbled to USD1,526.95 a troy ounce on May 16, the lowest since December 29.
On the week, gold futures advanced 0.75%, the first weekly gain in three.
Gold futures were likely to find short-term support at USD1,526.95 a troy ounce, the low from May 16 and resistance at USD1,639.05, the high from May 8.
Gold prices came under heavy selling pressure earlier in the week, falling to the lowest level since the start of the year on Wednesday, as speculation over the possibility of a Greek exit from the euro zone intensified after talks aimed at forming a coalition government failed.
The debt-laden country has called for new elections to take place on June 17, with the vote likely to determine whether Greece remains in the euro zone.
Meanwhile, concerns over the health of Spain’s banking system and the prospect of more state bailouts for lenders saw the country’s borrowing costs climb above 6% last week. On Thursday, ratings agency Moody's cut the credit ratings of 16 Spanish banks.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal.
A weakening euro and stronger dollar have weighed on gold instead, as the precious metal has been moving in tandem with riskier assets in recent months.
But futures recovered in the final two trading days of the week, rallying nearly 3.2% to post its largest two-day gain since October, as investors returned to the market to seek cheap valuations.
Renewed expectations for a third round of monetary easing by the Fed boosted the precious metal’s appeal after the minutes of the Federal Reserve’s April 26-27 meeting indicated that several policymakers remained open to further efforts to stimulate the U.S. economy if growth falters or if the risks to the economy became great enough.
Data on Thursday showing that manufacturing activity in the Philadelphia-region contracted for the first time in eight months in May added to concerns over the pace of the U.S. economic recovery.
A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week held steady at a seasonally adjusted 370,000, confounding expectations for a decline of 5,000 to 365,000.
Markets are watching the Fed minutes closely for hints of whether the central bank will engineer another round of asset purchases, or quantitative easing.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
A wave of technical buying provided further support as traders closed out bets on lower prices after futures moved into oversold territory, a move known as covering a short position.
Technical traders noted that the market's ability to hold above its late-December intraday lows close to USD1,523.95 a troy ounce was seen as a “bullish” signal and indicated that prices bottomed out for the time being.
Market participants noted that gold prices will likely face some resistance if they attempt to break above USD1,630 an ounce in the coming sessions as Europe’s debt woes will likely push investors to seek the relative safety of the U.S. dollar at the expense of the yellow metal.
In market news, data from the World Gold Council on Thursday showed that gold demand in China hit a record high in the first quarter due to investor worries over inflation and property market curbs, bucking a lower trend in global consumption driven by higher gold prices.
Elsewhere on the Comex, silver for July delivery settled at USD28.70 a troy ounce by close of trade on Friday, dipping 0.3% on the week. Prices had recovered from a four-month low of USD26.76 a troy ounce hit on May 16.
Meanwhile, copper for July delivery tumbled 5.77% over the week to settle at USD3.443 a pound, the lowest since January 10.
Copper prices lost ground amid lingering concerns over the debt crisis in the euro zone as well as ongoing fears over a ‘hard landing’ in China.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months, while China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
In the week ahead, investors will be watching euro zone manufacturing data, amid expectations that activity remains weak, which would increase the chances of more economic stimulus from the ECB.
In addition, the U.S. is to produce government data on durable goods orders, as well as data on exiting and new home sales.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing by the Fed, which could potentially hurt the dollar and support gold.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery settled at USD1,592.85 a troy ounce by close of trade on Friday.
Earlier in the day, prices hit USD1,597.35 a troy ounce, the highest since May 10. Prices tumbled to USD1,526.95 a troy ounce on May 16, the lowest since December 29.
On the week, gold futures advanced 0.75%, the first weekly gain in three.
Gold futures were likely to find short-term support at USD1,526.95 a troy ounce, the low from May 16 and resistance at USD1,639.05, the high from May 8.
Gold prices came under heavy selling pressure earlier in the week, falling to the lowest level since the start of the year on Wednesday, as speculation over the possibility of a Greek exit from the euro zone intensified after talks aimed at forming a coalition government failed.
The debt-laden country has called for new elections to take place on June 17, with the vote likely to determine whether Greece remains in the euro zone.
Meanwhile, concerns over the health of Spain’s banking system and the prospect of more state bailouts for lenders saw the country’s borrowing costs climb above 6% last week. On Thursday, ratings agency Moody's cut the credit ratings of 16 Spanish banks.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal.
A weakening euro and stronger dollar have weighed on gold instead, as the precious metal has been moving in tandem with riskier assets in recent months.
But futures recovered in the final two trading days of the week, rallying nearly 3.2% to post its largest two-day gain since October, as investors returned to the market to seek cheap valuations.
Renewed expectations for a third round of monetary easing by the Fed boosted the precious metal’s appeal after the minutes of the Federal Reserve’s April 26-27 meeting indicated that several policymakers remained open to further efforts to stimulate the U.S. economy if growth falters or if the risks to the economy became great enough.
Data on Thursday showing that manufacturing activity in the Philadelphia-region contracted for the first time in eight months in May added to concerns over the pace of the U.S. economic recovery.
A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week held steady at a seasonally adjusted 370,000, confounding expectations for a decline of 5,000 to 365,000.
Markets are watching the Fed minutes closely for hints of whether the central bank will engineer another round of asset purchases, or quantitative easing.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
A wave of technical buying provided further support as traders closed out bets on lower prices after futures moved into oversold territory, a move known as covering a short position.
Technical traders noted that the market's ability to hold above its late-December intraday lows close to USD1,523.95 a troy ounce was seen as a “bullish” signal and indicated that prices bottomed out for the time being.
Market participants noted that gold prices will likely face some resistance if they attempt to break above USD1,630 an ounce in the coming sessions as Europe’s debt woes will likely push investors to seek the relative safety of the U.S. dollar at the expense of the yellow metal.
In market news, data from the World Gold Council on Thursday showed that gold demand in China hit a record high in the first quarter due to investor worries over inflation and property market curbs, bucking a lower trend in global consumption driven by higher gold prices.
Elsewhere on the Comex, silver for July delivery settled at USD28.70 a troy ounce by close of trade on Friday, dipping 0.3% on the week. Prices had recovered from a four-month low of USD26.76 a troy ounce hit on May 16.
Meanwhile, copper for July delivery tumbled 5.77% over the week to settle at USD3.443 a pound, the lowest since January 10.
Copper prices lost ground amid lingering concerns over the debt crisis in the euro zone as well as ongoing fears over a ‘hard landing’ in China.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months, while China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
In the week ahead, investors will be watching euro zone manufacturing data, amid expectations that activity remains weak, which would increase the chances of more economic stimulus from the ECB.
In addition, the U.S. is to produce government data on durable goods orders, as well as data on exiting and new home sales.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing by the Fed, which could potentially hurt the dollar and support gold.