Gold and Copper quotes tumbled amid concerns around stimulus measures

YEREVAN, February 25. /ARKA/. Gold prices continued tumbling over the past five trading days as hopes for asset procurement program to last were fading away. The reason was the minutes of the last meeting of the US Federal Reserve System. According to the minutes, some US regulator officials expressed their concerns over mild monetary and credit policy, which made some investors prefer the US currency. Amid this concern, gold quotes Wednesday showed the deepest daily slump since November 2, 2012.

Earlier, during the trading week, the yellow metal quotes were influenced by increased demand for economic growth related assets.

Yet, gold prices recovered a bit by the end of the reporting period, owing to purchases at lower price levels and due to weaker than expected US macroeconomic statistics. As a result, the gold price dropped by 2.02% to 1580.10 USD per troy ounce last week.

Early next week, the gold price may rise slightly or consolidate amid disappointing US economic statistics released Thursday and Friday last week, which loosened investors’ concerns over early suspension of the stimulus measures in the US.

Speech of US Federal Reserve chairman Ben Bernanke in US Congress Tuesday February 26 is expected to become one of the key factors able to considerably influence the gold price and determine its dynamics over the next week. In his speech, the US regulator may hint at an option of early suspension of stimulus program or refute the allegation. Yet, in his speech, we believe, Bernanke will probably show bias toward soft policy and will support gold quotes. The expected resistance level for the next week may be 1,608.0 USD per troy ounce.

Moreover, within the next five trading days, the market members will mainly focus on the next deadline for budget sequester which will be enacted on March 1 if the American politicians fail to reach an agreement.

This week the gold dynamics will depend on the macroeconomic statistics from the U.S. and eurozone. Of the American news, we should highlight the reviewed 4Q GDP, the figures from the housing market, consumer confidence index and PMI business activity index in Chicago and throughout the country as a whole. Of the European news, we should prioritize consumer price index and February business activity index in industrial sector.

Most of this statistics is expected to be moderately optimistic. Therefore, the demand for risky assets may rise, and gold quotes may slip. The supporting benchmark for gold will be 1,550.0 USD per troy ounce.

Copper prices dropped by 5.41% to USD 3.5385 per pound last week as investors were concerned amid the uncertain situation around quantitative stimulus of the U.S. Federal Reserve and troubled European economy. China’s intentions to continue restricting hike in real property prices didn’t bring any optimism either.

Increased reserve of this asset at London Metal Exchange also prevented jump in copper quotes.

This week copper dynamics will mainly depend on the macroeconomic statistics from the US, Eurozone and China. If the forecasts are justified and the business activity index in industrial sector of Eurozone and China are optimistic, the prices for non-ferrous metal, including copper, can resume rising. The expected fluctuation range for copper quotes this week will be 3.34 – 3.60 USD per pound.

Mikael Verdyan, an analyst at FOREX CLUB, specially for ARKA news agency.
The opinion of the author does not necessarily reflect that of the agency.—0-

spot_img

POPULAR

Armenia to Receive €120 Million Loan and €15 Million Grant from KfW Bank for Power Grid Connection with Georgia

At a meeting on Thursday, the Armenian government approved the signing of a €120 million loan agreement with the German bank KfW for the "Caucasus Transmission Network - NIF" project to connect the power systems of Armenia and Georgia. Additionally, a €15 million grant agreement with KfW was approved for the "EU Caucasus Transmission Network - NIF. Phase II" project.

Armbanks Weekly Digest: Key Events in Armenian Financial Market (March 9–14) 

The past week in the Armenian financial market was marked by discussions of capital market development prospects at a specialized international conference, regulatory initiatives from the Central Bank, and changes to the insurance system.

Central Bank of Armenia and banks are ready to tighten mechanisms to combat telephone fraud – Galstyan

The Central Bank of Armenia, together with banks, is ready to introduce stricter mechanisms to prevent telephone fraud, stated regulator head Martin Galstyan, responding to a question from the ARKA news agency.

Armenia’s risk premium increased amid events in the Middle East – Galstyan

The risk premium in Armenia has increased slightly due to events in the Middle East, although not as much as in other countries in the region and beyond, stated Martin Galstyan, head of the Central Bank of Armenia.

Head of the Central Bank of Armenia explained the cause of February’s inflation

Inflation has components driven by supply and demand factors.

LATEST NEWS

spot_imgspot_imgspot_img