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Investing.com - This week precious metals traders will be monitoring the tone in the U.S. dollar ahead of a Federal Reserve meeting expected to shed more light on the outlook for U.S. interest rate hikes this year.
The Fed is widely expected to keep monetary policy unchanged at the end of its two-day policy meeting on Wednesday and policymakers will also update their projections for future rate hikes.
In January the Fed indicated that it will be patient as it considers more rate hikes, amid concerns over slowing global growth.
Gold prices were boosted on Friday, rising above the psychologically important $1,300 level as the greenback was weighed down by weak U.S. economic data.
U.S. manufacturing output fell for a second straight month in February and factory activity in New York state was weaker than expected this month. The data extended a recent streak of weak economic reports and underlined the case for the Fed’s patient stance on further rate hikes this year.
The U.S. dollar index was 0.24% lower, last at 96.540 and posted its biggest weekly loss since the first week of December.
A weaker greenback can be supportive for dollar priced commodities, making them cheaper to holders of other currencies.
Gold futures settled up 0.55% at $1,302.25 on the Comex division of the New York Mercantile Exchange, for a second straight weekly gain.
Gold also appeared to get a boost from renewed optimism over prospects for a U.S.-China trade deal.
“While primarily seen as a safe haven, gold is highly exposed to the emerging markets, which make up more than half of global demand, and China in particular,” said Carsten Menke, commodities research analyst at Julius Baer, in a note.
“An improving economic backdrop and strengthening local currencies versus the U.S. dollar bode well for gold demand. This is particularly true for China, where gold demand has been lackluster over the past few years, as consumers have become increasingly concerned about the outlook for the economy,” Menke said.
Elsewhere in metals trading, silver was up 0.78% to $15.290 a troy ounce, while copper ended at $2.908, up 0.57% for the day, for a weekly gain of 0.35%.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, March 18
The U.K. is to release data on house price inflation.
The euro zone will report on trade figures.
Tuesday, March 19
The Reserve Bank of Australia is to publish the minutes of its latest policy setting meeting.
The U.K. is to publish its monthly jobs report.
The ZEW Institute is to publish a report on German economic sentiment.