Heavy profit-taking crushed bullion prices late last week. Gold almost reached a new record high on Friday but eventually thought better of it and instead elected to nose-dive to $2,882 an ounce – a 1.5% drop. The price action in silver was even more bewildering, initially climbing to a multi-month high of $33.39 before plummeting back down to $32.11. It is worth mentioning at this point the developing story surrounding the apparent gold shortage in the London vaults. The threat of tariffs has prompted a flight of physical gold from the UK to New York, reaching volumes that have triggered delays in delivery. Delays reaching up to eight weeks if some reports are to be believed, compared to just a few days under normal circumstances.
The Dollar’s downfall continued last Friday after US retail sales posted their biggest loss since last February. The headline figure came in far below expectations with a 0.9% drop compared to the mere 0.1% fall priced in by forecasts. Sharp new year declines are nothing new, the festive season is over and the crushing misery of January typically lends to more frugal spending habits. The response from US indices was mixed; the response from the Dollar less so. The DXY made another leg down to close the week at 106.8 – a yearly low.
All quiet on the economic calendar today. This morning it was revealed that Japanese GDP growth considerably exceeded expectations but the Nikkei failed to react in the slightest. Absolutely nothing in the European session later on and US markets are closed due to Presidents’ Day.
The Reserve Bank of Australia is expected to lower rates on the Aussie Dollar on Tuesday, from 4.35% currently down to 4.1%. UK inflation data may provide some entertainment for currency traders on Wednesday, current forecasts are for a 2.8% yearly increase in prices. In the early hours of Thursday morning, the latest FOMC minutes are set to clarify the Fed’s decision-making process behind the most recent rate hold. Finally, the bulk of Friday’s news will be provided by the latest round of manufacturing PMIs.
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