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Gold futures - Weekly outlook: March 18 - 22

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Shutterstock photo - Gold futures ended Friday's session mildly higher, as a broadly weaker U.S. dollar and indications the Federal Reserve will keep its asset-purchase program in place for the indefinite future boosted the appeal of the precious metal.

Moves in the gold price this year have largely tracked shifting expectations as to whether the Fed could bring quantitative easing to an end this year.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery eased up 0.1% on Friday to settle the week at USD1,590.90 a troy ounce. On the week, gold futures prices posted a gain of 0.8%, the second straight weekly advance.

Earlier Friday, prices rose to a session high of USD1,597.80 a troy ounce, just below a two-week high of USD1,598.00 a troy ounce hit on March 13.

Gold prices were likely to find support at USD1,560.60 a troy ounce, the low from March 8 and near-term resistance at USD1,602.20, the high from February 28.

Gold prices were higher as U.S. inflation data indicated that the Federal Reserve had sufficient scope to continue its quantitative easing program.

The Labor Department reported that U.S. consumer price inflation rose 0.7% in February, bringing the annualized rate of consumer inflation to 2.0%.

Core consumer prices, which exclude volatile food and energy costs, also rose 2% year-on-year.

Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories.

In December, the U.S. central bank said an "exceptionally low" target interest rate is appropriate as long as inflation isn't forecast to rise to more than 2.5%.

Investors often buy gold as a refuge against economic uncertainty and as a hedge against inflation.

Sentiment on the greenback was also hit after data showed that the University of Michigan's consumer sentiment index dropped to 71.8 in March, the lowest level since December 2011, from a final reading of 77.6 in February.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, declined 0.6% on Friday to end the week at 82.34, the weakest level since March 8.

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.

From a technical standpoint, the precious metal has traded in a tight range of roughly USD1,560 to USD1,595 a troy ounce since the beginning of March.

In the week ahead investors will be focusing on Wednesday's Federal Reserve policy statement, amid speculation over an earlier-than-expected end to the bank's asset purchase program.

Fed Chairman Ben Bernanke is to give a press conference after the release of the policy statement.

Elsewhere on the Comex, silver for May delivery shed 0.2% on Friday to settle the week at USD28.74 a troy ounce. On the week, silver future prices declined 0.75%.

Meanwhile, copper for May delivery fell 0.6% on Friday to close the week at USD3.517 a pound. On the week, copper prices eased up a modest 0.1%. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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