A Week in Commodities
GOLD
Gold has been rallying since the last Fed meeting in Dec. With the holiday shortened market this week due to the New Year holiday, Monday started off at $1282.20 per oz. and traded flat closing up only $0.05 cents on the day. However, after the Holiday Break, Wednesday, Thursday and Friday morning the market moved up briskly to a high of $1298.54, almost breaking the threshold of $1300 per oz.
This bullish run was in part a “safe haven” play as the stock market crashed on the Apple, Inc news Thursday. However, on Friday there was a mini flash crash that brought the prices back down to below the week’s start. This reversal was due to positive Non-Farm Payroll numbers released earlier Friday. Gold prices have recovered somewhat from a low of $1276.50 to current trading of $1284 per oz., well off of Early Friday’s lows. A major factor in the decline Friday is the positive reports coming from the U.S. / China trade talks. If these talks fail to produce positive results, Gold should remain bullish. However, another point made this week is the significant resistance at the $1300 per oz. and major support at about $1280 per oz.
SILVER
Like Gold, Silver has been very bullish this week, having its strongest day, on Thursday, amidst the weakening U.S dollar as PMI manufacturing numbers came out much weaker than expected. This was quickly undone as Friday Non-Farm Payroll numbers came out much better than anticipated, giving the FED plenty of reasons to continue raising rate which strengthens the U.S dollar and generally weakens the precious metal markets. In the end, Silver opened on Monday at $15.47 and is going to close around $15.60 per oz. right in the middle between the week’s lows around $15.40 and highs just below $15.90, establishing solid support and resistance at those levels.
OIL
A welcome New Year’s gift to Oil prices this week. Oil prices have been moving up since the beginning of this holiday week from a start of $45.04 on Monday to high of $49.20 earlier Friday, which is a nice move up, following several months of sliding prices. Currently, Oil is trading at $47.84 late in the session Friday, while off the highs, still higher on the day, rounding off a nice week.
Contributing to the bullish push in prices, are first some optimism around the U.S and China trade relations. If there can be a tariff deal shortly, as is rumored, this will take some of the downward pressure off of the Oil prices. Another major factor this week is the reduction in rig count in the U.S. of 8 rigs. This falling rig count decreases overall production and provides additional support for Oil prices. The New Year has been a welcome relief for the Oil Bulls.
Bill Poulos is an avid investor, financial educator, author, and retired General Motors executive. Poulos is the president and co-founder of Profits Run, Inc., a publishing company. They offer online courses, coaching, software, and books focusing on investing in the stock market. Bill earned an engineering degree in addition to his MBA with a degree in finance from the University of Michigan. Bill and Profits Run celebrates individuals giving back to their community through the Profits Run Starfish Award. Bill lives in Wixom, Michigan with his wife, Karen.