(Bloomberg) — Gold and copper headed for weekly gains as the dollar weakened ahead of a key jobs report that may impact the outlook for the Federal Reserve’s monetary policy.
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The dollar has come under pressure this week after the European Central Bank and The Bank of England both turned more hawkish, bolstering their own currencies. The dollar is now set for its biggest weekly drop since November 2020, boosting metals priced in the currency.
Bullion has also been supported by a miserable week for U.S. stocks, sparked by a Meta Platforms Inc.’s $251 billion wipeout, the biggest one-day fall for any U.S. company. Concerns over tightening monetary policy contributed to the worst slide in American technology shares since 2020. Still, U.S. equity futures rose Friday as Amazon.com Inc. reported a strong holiday quarter, which helped ease some worries.
January’s nonfarm payrolls report due Friday is expected to be weak but most likely will not derail the Fed’s rates liftoff in March, according to Bloomberg Economics. Traders will be watching the pace of wage increases in the U.S., which affect inflation.
“If we were to see any significant backtracking in job gains, that may tame some aggressive rate hike bets in place by suggesting that the Fed may be more inclined to adopt a measured approach in raising rates ahead,” said Yeap Jun Rong, a strategist at IG Asia Pte. “This may then potentially add on to the recent dollar weakness and provide support for gold prices.”
Spot gold rose 0.4% to $1,812.81 an ounce as of 10:17 a.m. in London, and is up 1.2% this week. The Bloomberg Dollar Spot Index edged lower, taking its weekly loss to 1.4%. Silver and palladium advanced, while platinum fell.
In base metals, copper headed for its best week since October as stockpiles dropped for a 10th day on the London Metal Exchange. Strong demand from the industrial market and pandemic constrained supply has pushed all major LME metals into backwardation — where spot prices trade over futures — signaling tightness.
Copper climbed 0.4% to $9,867 a ton on the LME. It’s heading for a weekly gain of 3.8%. Most other metals gained, led by lead which rose 1.2%. Markets in China remain closed for the Lunar New Year holidays.
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