Gold / Silver / Copper futures - weekly outlook: October 14 - 18

Investing.com - Gold futures tumbled to a three-month low on Friday, as hopes that U.S. lawmakers would reach a deal on the U.S debt ceiling impasse before the October 17 deadline reduced the safe-haven appeal of the precious metal.  

Some technical selling also contributed to losses after prices fell through key support levels.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery dropped 1.93% on Friday to settle the week at USD1,271.90 a troy ounce.

Comex gold prices fell to USD1,259.60 a troy ounce earlier in the day, the weakest level since July 10. The December contract settled 0.79% lower at USD1,296.00 a troy ounce on Thursday.

Gold futures were likely to find support at USD1,242.35 a troy ounce, the low from July 10 and resistance at USD1,311.80, the high from October 10.

On the week, the precious metal lost 2.9%, the second consecutive weekly decline.

House Republicans and the Obama administration began a second day of negotiations on Friday on a deal to reopen the government and raise the U.S. debt ceiling for six weeks.

The federal government has been shut down since October 1. Lawmakers must raise the national borrowing limit by October 17 or run the risk of a U.S. sovereign debt default.

Technical selling also pressured gold after it fell through key support levels close to the USD1,280-level, triggering a flurry of automatic sell orders amid bearish chary signals.

An unusually large sell order at the start of the Comex floor trading session sent prices tumbling by USD30 within minutes, fuelling speculation hedge funds and large institutional investors were dumping long positions.

Uncertainty surrounding the Federal Reserve's stimulus program was also in focus.

Wednesday’s minutes of the Fed’s September meeting said the decision not to begin tapering stimulus was a "close call," with all but one voting member opting to leave the program unchanged.

Concerns over economic impact of the U.S budget and debt ceiling impasse fuelled expectations that the central bank will further delay plans to start phasing out its USD85 billion a month asset purchase program.

Data released on Friday showed that U.S. consumer sentiment fell to the lowest level in nine months in October, as concerns over the impact of the government shutdown weighed.

The University of Michigan’s consumer sentiment index declined to 75.2 from a final reading of 77.5 in September, and below expectations for a reading of 76.0.

In the week ahead, investors will continue to closely monitor political developments in Washington. Gold traders will also scrutinize speeches from a number of Federal Reserve officials for clues on monetary policy.

Elsewhere on the Comex, silver for December delivery plunged 2.91% on Friday to settle the week at USD21.25 a troy ounce. Silver prices settled 0.02% higher at USD21.89 on Thursday.

On the week, silver future prices declined 2.29%, the fifth consecutive weekly loss.

Meanwhile, copper for December delivery advanced 0.63% on Friday to close the week at USD3.269 a pound. On Thursday, copper futures rose 0.54% to settle at USD3.248 a pound.

Despite gains on Friday, prices of the red metal declined 0.96% on the week, amid concerns a U.S. government shutdown will create a drag on fourth quarter economic growth.

Official data released on Saturday showed that China’s trade surplus narrowed sharply in September as exports declined unexpectedly, fuelling concerns over growth prospects in the world’s second-largest economy.

China’s trade surplus narrowed to USD15.2 billion last month from a surplus of USD28.6 billion in August, compared to estimates for a surplus of USD27.7 billion.  

Chinese exports fell 0.3% from a year earlier, defying expectations for a 6% increase and following a 7.2% gain in August.

Market players now looked ahead to a raft of Chinese economic data later in the week, including reports on inflation, gross domestic product, industrial production and retail sales.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.