Gold / Silver / Copper futures - weekly outlook: Dec. 30 - Jan. 3

Investing.com - Gold futures edged higher in quiet holiday trading on Friday, as a broadly weaker U.S. dollar boosted the appeal of the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery inched up 0.14% on Friday to settle the week at USD1,214.00 a troy ounce. Gold prices rose to a session high of USD1,218.90 a troy ounce earlier in the day, the strongest level since December 19.

Futures were likely to find support at USD1,195.70 a troy ounce, the low from December 24 and resistance at USD1,226.00, the high from December 19.

Comex gold prices advanced 0.75% on Thursday to settle at USD1,212.30 a troy ounce. On the week, the February Comex gold contract added 0.84%.

Trading volumes remained limited as many investors already closed books before the end of the year, reducing liquidity in the market.

Gold’s gains came as the euro rallied to a two-year high against the U.S. dollar after European Central Bank Governing Council member Jens Weidmann said keeping interest rates low may endanger political reforms.

According to Germany’s Bild newspaper, Weidmann said low inflation shouldn’t be used to justify loose monetary policy. "We must take care to raise interest rates again in a timely manner should inflation pressures build," he reportedly added.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, declined 0.25% on Friday to end the week at 80.47.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

Gold’s gains were limited amid expectations of further stimulus tapering by the Federal Reserve. The U.S. central bank will start reducing its bond-buying stimulus program by USD10 billion a month in January, amid indications of an improving U.S. economy.

Some market participants believe the Fed will likely reduce its bond purchases by USD10 billion in each of its next seven meetings before ending the program in December 2014, as the U.S. recovery deepens.

Data on Thursday showed that the number of individuals filing for initial jobless benefits declined by 42,000 to a seasonally adjusted 338,000 last week. Analysts were expecting U.S. jobless claims to fall by 35,000 to 345,000 from the previous week’s revised total of 380,000.

Gold is down approximately 28% this year, on track for its first yearly loss in 13 years and the worst since 1981, as solid U.S. economic data underlined expectations the Fed will begin curbing stimulus.

In the week ahead, the U.S. is to publish reports on pending home sales, consumer confidence and jobless claims, as investors attempt to gauge the strength of the world’s largest economy.

Trading volumes are expected to remain light, with many markets closed for the New Year’s holiday, reducing liquidity in the market and increasing the volatility.

Elsewhere on the Comex, silver for March delivery ended Friday’s session up 0.67% to close the week at USD20.04 a troy ounce. Comex silver prices rallied 2.22% on Thursday to settle at USD19.91 a troy ounce.

March silver futures jumped 2.94% on the week. The precious metal is down approximately 34% this year.

Meanwhile, copper for March delivery declined 0.4% on Friday to settle the week at USD3.385 a pound. Prices of the industrial metal advanced 0.73% on Thursday to end at USD3.398 a pound.

The March contract surged to an eight-month high of USD3.420 a pound on Tuesday after an erroneous trade triggered a late-session rally.

On the week, Comex copper prices rose 2.27%.