February Gold settles 1096.7 up $5.60 for the week of January 18th through January 22nd
Gold futures fell slightly on Friday falling and settling below the 1100.0 level. However gold posted a slight weekly gain of 0.5 percent for the week. The yellow metal was buoyed by falling stock and energy prices early in the week as gold traded above the 100 day moving average making a weekly high of 1109.9 basis February. The rally was short lived as stock prices followed by energies regained footing on Thursday and Friday. The outlook for gold near term could be determined by next week’s Federal Open Market Committee meeting where a dovish tone may be a prelude for a weaker dollar providing a boost for commodities and potentially stock prices. This week European Bank President Mario Draghi said on Thursday that fading growth and inflation prospects will force its policy stance in March, a signal that possibly more monetary easing is in the future. Global stock prices rallied following the comments.
Gold prices have had a difficult time trading and closing above 1100.0 per ounce in 2016 with two of the reasons for the failure are that gold premiums in China have only risen slightly in 2016 while sellers in India has offered discounts amid poor demand. Gold’s repeated failure at these current levels bears watching and the market needs something inflationary to enter into the market to spur demand. If the FOMC adopts a dovish tone in remarks next week on the economic outlook, I would look for the stock market to be the overall beneficiary and not the metals. That has been the trend since QE was enacted years ago under Chairman Bernanke and I don’t see any reason in the near term why that would change this year.
