Investing.com - This week precious metal traders will closely monitor movements in the U.S. dollar, one of the biggest drivers for gold, ahead of a U.S. jobs report that could underline the Federal Reserve’s case for patience when it comes to future interest rate hikes.
Markets expect the U.S. nonfarm payrolls report for February to show 180,000 new jobs and an unemployment rate of 3.9%, but wage data will be particularly closely watched at a time when inflation remains low.
Other U.S. economic data reports on tap this week include figures on new home sales and the Institute for Supply Management’s non-manufacturing index on Tuesday, an update on private sector hiring on Wednesday and housing starts on Friday.
The dollar rose on Friday, hitting 10-week highs against the yen as market sentiment was boosted by a more upbeat outlook on some major world economies and the prospect of a trade deal between the U.S. and China.
The U.S. dollar index, a gauge of the currency’s value against six major currencies, rose 0.35% on Friday, posting its largest daily percentage gain in two weeks. For the month of February the index was up 0.78%.
The stronger dollar saw gold prices fall more than 1%, to hit their lowest level since January.
Gold futures settled down 1.65% at $1,294.45 on the Comex division of the New York Mercantile Exchange, having fallen below the psychologically important $1,300 level for the first time since January 25. For the week, prices were down 2.52%, the most since August 2018.
"The U.S. dollar index and two-year Treasury yields have moved up over the last couple of days and these factors have prompted people to take some profits (in gold)," said Bart Melek, head of commodity strategies at TD Securities in Toronto.
"We are also seeing a continued reaction to Federal Reserve statements where hikes are still on the menu, given that data seems to be fairly strong in the United States."
Higher global stocks also weighed on gold, analysts said.
"Better sentiment on the stock markets and a reluctance by the physical gold investors are weighing on its price," Commerzbank analysts said.
Elsewhere in metals trading, silver dropped 2.52% to $15.20 per ounce after hitting $15.14, a low last seen on Jan. 22. The metal was down 4.5% so far for the week, its biggest decline since the week of Feb. 2, 2018.
Copper ended at $2.926, down 0.75% for the day, extending the week’s losses to 0.61%.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, March 4
Australia is to release reports on building approvals and company operating profits.
The euro zone is to publish Sentix investor confidence data and figures on producer prices.
The U.K. is to publish a report on construction sector activity.
Tuesday, March 5
China is to release its Caixin services index.
The Reserve Bank of Australia is to announce its benchmark interest rate and publish a rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
The U.K. is to release data on service sector activity.
The U.S. is to produce data on new home sales and the Institute of Supply Management is to release its index of non-manufacturing activity.
Bank of England Governor is due to testify before the House of Lords in London.
Wednesday, March 6
Australia is to publish figures on fourth quarter economic growth.
The U.S. is to release data on ADP nonfarm payrolls.
Both Canada and the U.S. are to produce trade figures.
The Bank of Canada is to announce its benchmark interest rate and publish a rate statement.
New York Fed President John Williams is to speak at an event in New York.
The Fed is to release its Beige Book, which contains insights on business activity.
Thursday, March 7
Australia is to publish figures on retail sales and trade.
The European Central Bank is to announce its benchmark interest rate and publish a rate statement. The policy announcement is to be followed by a press conference with President Mario Draghi.
Canada is to report on building permits.
The U.S. is to release the weekly report on initial jobless claims.
Fed Governor Lael Brainard is to speak.
Friday, March 8
China is to publish its latest trade figures.
Canada is to publish its monthly employment report.
The U.S. is to round up the week with what will be a closely watched nonfarm payrolls report, along with figures on building permits and housing starts.
-- Reuters contributed to this report