To wrap up the week in U.S. trading, both gold and silver prices weakened. Furthermore, outside market forces such as a higher U.S. dollar index and rising U.S. Treasury yields are also bearish for the metals market bulls. April gold closed at $1,817.10, down by $9.7, while March silver is down $.496 at $20.810.
The U.S. data point of the day on Friday was the personal income and outlays report for January, including its PCE price index component. As the Fed’s preferred inflation measure, the annual core PCE price index, accelerated in January to 4.7%, above expectations of 4.4%. This macroeconomic outlook has led to concerns about gold’s vulnerability in the short term, with indications of a potential further drop if it falls below $1,800 per ounce. As noted yesterday, there is strong resistance indications at $1,780. However, geopolitical tensions are supporting gold’s search for a bottom in this downtrend, as the threat of nuclear war looms large.
Global stock markets experienced mixed results overnight, with U.S. stock indexes opening and closing lower after a hot inflation report. This week, the U.S. stock indexes have hit multi-week lows, signaling a low risk appetite, as the market finally understands that the U.S. will maintain tighter monetary policies to curb inflation. This scenario is bearish for the metals market from a global demand perspective.
Despite the volatility in the gold market, some experts predict that the precious metal’s tendency for quick selloffs and recoveries during times of panic will continue. Analysts will closely monitor macro data scheduled for next week, including the ISM manufacturing and service sector reports for February, for any signs of weakness after a more-or-less strong start to the year.
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