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-
