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Gold Inches Towards $1,300 Amid Volatility Expectations

January 7, 2019 at 14:39 by Andrew Moran

Gold futures are rallying to kick off the first full week of trading in 2019. The yellow metal is looking to rebound after sliding 0.7% on Friday, the biggest daily drop since the middle of December. Gold is climbing higher on expectations of greater volatility in global financial markets, and bullion investors are also taking into consideration the Federal Reserve’s slower approach to normalizing monetary policy.

February gold futures rose $8.00, or 0.62%, to $1,293.80 per ounce at 13:03 GMT on Monday. Gold prices recorded a weekly gain last week of 0.5%, and they are already ahead 1% on the year.

Silver, the sister commodity to gold, is rising to start the trading week. March silver futures tacked on $0.045, or 0.29%, to $15.83 an ounce. The white metal surged 1.5% last week.

Investors appear to be bullish on precious metals, convinced that more volatility is in store for global financial markets in the near-term. In the first week of 2019, the major leading stock indexes have seesawed and have been unable to find a clear direction. With international trade disputes still occurring, traders fear that tariffs, restrictions, and geopolitical tensions will impact markets.

The US labor market continues to roar, adding 312,000 new jobs in December, beating out market estimates. This positive data could contribute to the US central bank moving forward on policy normalization, but Fed Chair Jerome Powell recently said at a business conference that the Eccles Building will pay attention to the economy before being too aggressive on interest rates.

Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

Powell also sent a message to President Donald Trump that he would not resign if asked by the White House. In recent months, the president has slammed Powell for raising rates, sounding the alarm that the central banks is threatening the entire economy with rate hikes.

Statements and policy maneuvers coming from the Fed in recent days have affected the US dollar as the greenback tumbled 0.35% to 95.79 on Monday. The currency reported a 0.39% loss last week. A weaker is buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

In other metals markets, March copper futures were flat at $2.64 per pound. March platinum futures edged up $2.30, or 2.28%, to $829.50 per ounce. March palladium futures surged $11.10, or 0.9%, to $1,245.50 an ounce.

If you have any questions and comments on commodities today, use the form below to reply.

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