Friday saw gold futures hit a 13-week high of $1,270.70 an ounce, up $12.50 for the day. This healthy gain pushed the price of gold futures to a 3.1% gain for the week, and the best start of the year EVER. Spot gold prices Friday started at $1,265, and battled their way up to the $1,280 mark during the session. This was “a bridge too far” for the yellow metal, as profit taking set in. Spot prices closed down $4.80 to settle at $1,259.10.
Despite a stronger dollar this morning, spot gold is up $10.50 to $1,269.60 an ounce. Prices were testing support at $1,266 earlier, after bouncing off the first resistance level of $1,273. The next major support level is Friday’s close at $1,259. If prices break above $1,273, the next hurdle will be $1,276.
Oil is joining today’s party, adding to gains Friday that saw WTI mark its highest close since January 5th. April US crude futures closed up 3.9%, to just under $36 a barrel. WTI saw an amazing 9.6% rise on the week, putting paid to discussions of $20 oil in the near future.
Overseas, Brent crude settled at $38.72 a barrel Friday, the highest close since last December. That was up 4.5% for the day, and 9.3% for the week. Higher crude prices, as well as a sudden rally in iron ore, are helping emerging markets stocks.
The crude rally was fueled by reports that US oil production was down, and that the active rig count from Baker Hughes had fallen for the 11th straight week.
Stocks opened lower on Wall St. this morning, after gains on Friday.The Dow closed above 17,000 for the first time since early January, and the S&P 500 recorded a forth session of gains.
It seems that the markets Friday found something to like in the non-farm payrolls report, wherever they looked. Jobs rose more than expected, but the first decline in wages in over a year reduced the chances of a Fed interest rate hike.
That particular thought may be changing. The CME Group FedWatch tool, which calculates the probably of an interest rate hike by tracking Fed funds futures, still shows a zero percent chance of a rate hike this month. Odds increase for later in the year, with a 46% chance of a hike in July, rising to a 73% chance in December. These numbers are just a snapshot in time, and can change throughout the trading day. Still, it is handy for gauging market sentiment at a particular point.
Markets, especially in Asia, may be walking on eggshells for the first part of the week, waiting for the results of Thursday’s ECB policy meeting. If Mario Draghi and the gang decide to push benchmark interest rates further into negative territory, gold could reach for $1,280 and beyond.
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