Gold futures - Weekly outlook: September 24 - 28

Forexpros - Gold futures advanced on Friday, hitting the highest level since late-February, as the U.S. dollar weakened amid market talk Spain was moving closer to seeking a full-scale sovereign-debt bailout. The precious metal also drew support from expectations central banks around the world will continue to introduce monetary easing measures to stimulate the global economy. On the Comex division of the New York Mercantile Exchange, gold futures for December delivery settled at USD1,775.35 a troy ounce by close of trade on Friday. Earlier in the day prices touched a session high of USD1,787.55 a troy ounce, the highest level since February 29. On the week, gold futures added 0.3%, the fifth consecutive weekly gain. Gold futures were likely to find support at USD1,751.95 a troy ounce, the low from September 18 and resistance at USD1,792.25, the high from February 29. Risk appetite was bolstered by reports that Madrid was moving closer to requesting a sovereign bailout and is currently working out the terms with European Union policymakers. A bailout would allow the European Central Bank to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. The news sparked demand for the euro and other higher-yielding assets, which sent gold's traditional hedge, the U.S. dollar, falling on Friday. The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, declined 0.1% on Friday to settle the week at 79.44. 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. Despite growing market speculation, hopes for a near-term Spanish bailout announcement were dented after Germany’s Finance Minister Wolfgang Schaeuble said Friday Spain did not need a sovereign bailout on top of the package already agreed for its banks because it was on the right path to regain the confidence of markets. Madrid saw borrowing costs fall at an auction of government debt on Thursday, after the ECB pledged earlier this month to buy unlimited amounts of short term government bonds from troubled euro zone members, but only after they request assistance. Gold prices also drew support from ongoing expectations policymakers around the world will launch more stimulus to boost slowing global growth. On Wednesday, the Bank of Japan said it would expand its asset purchase and loan program by JPY10 trillion to JPY80 trillion, in an effort to stimulate slowing economic activity and to counter the strengthening yen. The move came one week after the Federal Reserve announced that it will buy USD40 billion of mortgage-backed securities each month until the labor market improves and pledged to keep interest rates close to record lows until at least the middle of 2015. The precious metal has rallied on past monetary stimulus measures. Investors tend to flock to gold on fears that excess liquidity would erode the value of fiat currencies and spark inflation. Gold futures have gained nearly 10% since the beginning of August, buoyed by recent stimulus efforts by major central banks around the world. In the week ahead, investors will continue to eye developments in Spain, while U.S. data on consumer sentiment and spending will be closely watched as investors attempt to gauge the strength of the U.S. economy. Elsewhere on the Comex, silver for December delivery settled at USD34.57 a troy ounce by close of trade on Friday. Earlier in the day, silver futures touched a high of USD35.22, the strongest level since March 2. On the week, silver futures shed a modest 0.35%. Meanwhile, copper for December delivery advanced 5.1% over the week to settle at USD3.772 a pound. Prices rallied to a four-and-a-half-month high of USD3.838 a pound on September 19. Copper futures lost 1.2% on the week, weighed down by concerns over a deeper-than-expected slowdown in Chinese economic growth. Data on Thursday showed that China’s HSBC flash purchasing managers' index ticked up to 47.8 in September from 47.6 in August, remaining below the 50.0-mark for the 11th consecutive month, showing the sector was still contracting. The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.