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Gold Slips to One-Month Low As Investors Jump Back Into Equities

January 21, 2019 at 18:25 by Andrew Moran

Gold futures slipped to their lowest levels in a month as investors have renewed their interest in the equities market. With a greater risk appetite among traders, precious metals have not garnered the same amount of attention in recent sessions, which could explain last week’s decline.

February gold futures tumbled $3.10, or 0.24%, to $1,279.50 per ounce at 16:42 GMT on Monday. Gold prices suffered a 1% weekly loss, bringing the yellow metal’s year-to-date loss to 0.4%.

Silver, the sister commodity to gold, is also contracting to kick off the trading week. March silver futures slipped $0.105, or 0.69%, to $15.29 an ounce. The white metal recorded a steeper weekly drop of 2.5%.

US markets are closed on the Martin Luther King Jr. public holiday, which has been observed on Wall Street since January 1998. Foreign markets were mixed on Monday: the DAX shed 69 points, the FTSE 100 gained two points, and all the leading Asian exchanges were in the green.

Investors are diving back into equities, which allowed the Dow Jones Industrial Averages (DJIA) to gain more than 300 points on Friday, extending its four-week winning streak. But metal commodities could gain momentum on geopolitical risks and a weaker US dollar.

Great Britain is embroiled in political turmoil. Prime Minister Theresa May is attempting to save her Conservative government and turn around the Brexit campaign with “Plan B.” But analysts are warning that if she fails, then chaos will remain the same, which could spur demand for precious metals. The US is also enduring the pain as the partial federal government shutdown enters its fourth week without any end in sight, despite President Donald Trump offering partial amnesty in exchange for border wall funding.

The International Monetary Fund (IMF) released a report that suggested global economic expansion is slowing down, slashing its growth forecasts as a result.

After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising. But even as the economy continues to move ahead … it is facing significantly higher risks

While the greenback is up so far in 2019, the currency has advanced just 0.15%. On Monday, the dollar dipped 0.03% to 96.33. A weaker buck is good for dollar-pegged commodities because it makes it cheaper for foreign investors to purchase.

On the monetary policy front, investors will look ahead to the next Federal Reserve meeting at the end of the month. It is widely expected that the central bank will hold off on raising interest rates. The market does not anticipate another rate hike until the end of the year, despite a roaring labor market and bouts of positive economic data.

In other metals markets, March copper futures shed $0.045, or 1.63%, to $2.67 per pound. March platinum futures slipped $3.60, or 0.45%, to $798.50 an ounce. March palladium futures fell $23.40, or 2.75%, to $1,311.70 per ounce.

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

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