Investor enthusiasm on the wane

It has been a disappointing week for commodity prices, against a backdrop of a stronger dollar and the likelihood of an imminent rate hike in the US. The strong US employment report on Friday removed the last obstacle to Fed tightening. Investor selling goes some way to explaining this week’s price falls, particularly in the case of oil, copper and gold. The focus next week will remain on the Fed which is expected to hike interest rates by 25 basis points on Wednesday. While the move is widely anticipated, gold prices could fall further in the event. That said, the triggering of Article 50, which would officially start the Brexit process, could lend some support to gold prices over the coming weeks. Otherwise, on Tuesday, China’s industrial output and investment data will provide an indication of the strength of metals demand in the first two months of the year.