Uncertainty Continues: Commodities Update
GOLD
Gold dropped big time this week, after opening at $2034 per oz, on Wednesday we saw a low of $1863 before recovering back above $1900 per oz. The big story is that it is no longer trading above the $2000 level due mainly to the uncertainty in congress over the Covid-19 relief package negotiations. Also, a pull back after such a huge run up over the last several weeks is well within reason as there is obvious profit taking. The second important headline story after the big drop, is the nice bounce of the mid-week lows to push the price back above $1900. Currently trading above $1940 in late trading on Friday’s session has the price well off the weekly lows. This bounce seems to be holding for the time being going into the weekend. With the easy monetary policy of the Federal Reserve, there are still large bullish forces at work that should push the price higher over the next month or so, but not without some volatility in price.
SILVER
Like gold this week, silver had a big drop in price, opening at $28.27 per oz, then dropping severely early in the week, rebounded mid-week almost back to $28, but then losing some ground on Friday. The price is still well above the weekly low of $23.40, trading at $26.25 late on Friday, but well off the highs of last week. News is certainly driving these price swings with the drop earlier in the week driving by the uncertainty of the passage of any kind of meaningful Covid-19 relief package and the Retail Sales numbers which did not meet expectations, puts pressure on the U.S dollar and is bearish for metals.
OIL
U.S. Oil prices continued to grind sideways this week in a tight range. Oil opened this week at $41.53 and ranged between $41 and $43 all week. Current trading late on Friday is $ 41.75 just above the week’s open but clearly in the sideways chop. There was a bigger than expected drawdown in crude inventories Wednesday, which did push the price up some, but just to top of the weekly range However, with renewed US -Iranian tensions brewing there may be some push higher due to the political risk involved. We will need to stay tuned as oil traders deal with geopolitical tensions all the time and many times they do not amount to big movements. So, we will need to stay tuned to these global events.
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