Investing.com - Gold prices look likely to remain vulnerable to swings in the dollar this week as the precious metal’s inverse relationship to dollar continues to offset safe haven demand.
With another fairly light week on the economic calendar investors will continue to monitor developments on the U.S. political front after a bruising week for President Donald Trump, following the criminal conviction of two associates.
Tuesday’s U.S. trade data will be in focus after US-China trade talks ended Thursday with little progress and both countries slapped fresh reciprocal tariffs on imports.
On Wednesday investors will get the chance to parse a revision to second quarter U.S. GDP. Growth is expected to be revised down to 4% from the initial estimate of 4.1%, but that would still represent the fastest pace of growth in four years.
Gold futures surged higher on Friday and notched their first weekly gain in seven weeks as the U.S. dollar weakened against a currency basket following a speech by Federal Reserve Chairman Jerome Powell.
December gold futures settled up 1.53% at $1,212.30 on the Comex division of the New York Mercantile Exchange. For the week, prices gained 2.53% after posting losses for six straight weeks.
Prices are still down 0.93% for the month, pressured lower by gains in the dollar.
In a closely watched speech at the central bank’s annual gathering at Jackson Hole, Wyo. Powell said he expects to see further interest rate increases, but suggested that the Fed funds rate was getting closer to neutral.
Once interest rates reach a neutral equilibrium, where they neither stimulate nor suppress the economy the Fed can cease hiking rates.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.49% at 95.08 late Friday. The index ended the week down 0.96%, its second consecutive weekly decline.
A weaker U.S. currency makes gold and other dollar-denominated commodities less expensive for foreign investors.
Gold prices have fallen around 14% so far this year, pressured lower by the stronger dollar and rising interest rates. Investors have also shunned the precious metal despite an escalation in global trade tensions, indicating that gold may be losing its safe haven status.
Elsewhere in precious metals trading, silver settled up 1.67% at $14.785 a troy ounce. Platinum settled at $790.5, 1.55% higher for the day, to end the week up 0.28%.
Among base metals, copper ended at $2.699, up 1.77% for the day, for a weekly gain of 2.86%.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, August 27
Financial markets in the UK will be closed for a holiday.
The Ifo Institute is to report on German business climate.
Tuesday, August 28
The U.S. is to release reports on the trade balance and consumer confidence.
Wednesday, August 29
The U.S. is to publish revised second quarter GDP data as well as figures on pending home sales.
Thursday, August 30
New Zealand is to produce data on business confidence.
Australia is to release reports on capital spending and building approvals.
In the euro zone, Germany is to publish preliminary inflation figures.
Canada is to release what will be closely watched figures on second quarter GDP growth.
The U.S. is to produce data on personal spending along with the core PCE price index, which is the Fed’s preferred inflation measure.
Friday, August 31
China is to publish reports on manufacturing and service sector activity.
The euro zone is to release preliminary inflation data.
The U.S. is to round up the week with a report on business activity in the Chicago area.