- First Weekly Loss in Several Possible
- Multiple Factors at Play in Challenging Week
- Attention Turns to US PMIs After ECB Support
The price of gold has slipped in early trading today below the key benchmark of $1800 on a week that has been dramatic not as much for commodities news and the market in that respect, but certainly on Wall Street which has had an impact on commodity prices including gold and other precious metals which are similarly lower on the week. Several factors from COVID cases to USD forex market strength, to national domestic issues and treasury yields have all played a continuing role in the movements of the week as the market starts to look forward.
Gold Moving Toward Rare Weekly Loss
Though trading during weekly periods has been fluctuating at times for gold, the precious metal has not posted an overall weekly loss in 5 weeks. This is a statistic that is looking ever more likely to change as prices started out down in the European session. Gold is trading just below $1800 which could be a key hurdle though it has pushed back from a similar dip earlier in the week.
Even if it were to close negative on the week, traders are still showing some resilience in trading gold and the other precious metals. None are down too heavily and all are positive over a longer timeframe. There is a hint of caution or sentiment that traders still need to have a foot on both sides of the line until the overall economic picture becomes clearer.
Dollar Strength and More Moving Commodities
It is difficult to pin down only one key factor that is moving the needle on gold and other commodities. Instead, there are a number of issues at hand. The first of these is the stronger US Dollar which was stoked by the fiery start to the week of the equities market. The Dow Jones shed more than 700 points to start the week and this gave extra momentum to the Dollar.
This kind of stronger Dollar does not bode well for gold or other precious metals typically, though as the stock market rebounded quickly, so too has the price of gold from a low earlier in the week. Other obstacles to address include the US treasury yields which have started to tick higher again, and the overarching theme of COVID case worry.
US Data Comes into Focus
The next movers for gold and other commodities could well be US PMIs that are due for manufacturing and services. These will be eyed keenly by traders particularly from an inflation point of view.
Other drivers include how the corresponding EU data look as well as how the ECB policy changes will be implemented and how the commitment of the bloc to keep interest rates low pans out moving ahead. Until then commodity prices remain reliant on current sentiment which does appear to be ending the week stronger.