The commodities market was not the normal set of days in the past week (February 19 – February 22). The Fed failed to flip the table over, no new monumental trade deals were reached, and it seems like the playing field has been reset a bit, largely due to the gold market’s price action. A brief recap of the market particularly the movements of gold price between February 19 and February 22 is provided below.
What kind of week was it?
It has been quite a week in the gold markets with spot prices trading energetically within the $25-range. Gold prices traded at $1330/oz at some point, just $15 off of the week’s peak. The price action is a continuation of the strength gold has shown in the month of February. However, the metal also seems to have gained value this week without being the second-order result of movement in some other assets. Another positive sign for the commodity is that the spot prices have demonstrated some solid footing at support levels around $1325, which is close to the January market high.
Dollar Down + Economic Gloom
While one of the major factors driving the prices of gold is US Dollar indices being down, there are other factors that can be attributed to the price increase. The light weight macroeconomic calendar provided a few small doses of confidence in the US growth picture with the NAHB Housing Market Index showing signs of a further recover from lows, and initial jobless claims moderated a bit from recent highs. All in all, it was another week of signs that the US economy could be slowing more than expected.
Despite a relatively lighter macroscopic calendar this week, the price action for gold would have felt like a busy five-day week, except for the Monday holiday. Traders have their eyes set on a few calendar items such as US GDP, congressional testimony from FOMC Chairman Jerome Powell, and further indications of the housing market.
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