Weekly Commodities Recap: Firm Greenback Weighs on Demand for Dollar-Denominated Gold, Crude Oil
There was notable activity in the commodity markets during the shortened holiday week. The price of gold was slightly lower after hitting a six-week high on Monday as the US dollar strengthened. Crude oil closed a little lower and in line with the previous week as traders began to wonder if the seven-week rally was running out of steam and natural gas retraced about 50% of its two-week rally due to renewed weather concerns.
Gold climbed to a six-week high last Monday on news that US Congress leaders had reached an agreement on a COVID-19 bailout package while lockdowns in the UK soured appetites for riskier assets and increased support for the precious metal.
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Last week, February, Comex Gold hit $ 1,883.20, down $ 5.70, or -0.30%.
Later that day, gold erased early gains and fell as much as 1.3%. He spent the rest of the week regaining its bullish momentum under pressure from a rising dollar as fears of a new strain of coronavirus upset markets and enforced tighter restrictions.
Risk sentiment played a role in the weakness as forex and stocks participated in the price slide. The new variant of the virus caused uncertainty again and instead of choosing gold as a safe haven, investors sought protection from the US dollar, which weighed on foreign demand for gold denominated in dollars.
Crude oil prices
US West Texas Intermediate crude and international benchmark Brent crude also fell similarly to gold, with the common factor between the two commodities being the firmer US dollar.
Crude oil prices fell nearly 3% last Monday as a fast-spreading new strain of coronavirus that has shut down much of the UK and tightened restrictions in Europe raised concerns about a slower recovery in fuel demand.
Last week, WTI crude was $ 48.23 in February, down 1.01 or -2.05%, and Brent crude closed at $ 51.29 in February, down $ 0.97 or less -1.89%.
Based on price action over the rest of the week, the Monday sell-off was more of a jerky response to the virus news than the start of a trend change. That view became clearer on Wednesday as oil prices rose more than 2%, fueled by declines in US inventories of crude oil, gasoline and distillates, which raised investor hopes for a return in fuel demand.
Natural gas prices
The trading week shortened by the holidays was not good for the natural gas market as prices fell due to weak cash prices, forecasts that call for milder temperatures, and light heating needs, according to the US government's weekly storage report.
Last week, February, natural gas futures fell to $ 2.512, down 0.169, or -6.30%.
Prices fell sharply on Wednesday after the Energy Information Administration (EIA) reported a pullback in several Bcf that was below market expectations. EIA said inventory levels fell by cf152bn for the weekend ended December 18, while analysts kept the draw closer to cf160bn.
In our economic calendar you will find all economic events of today.
This article was originally published on FX Empire
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In this article
CL = F.
NG = F.
GC = F.
ZG = F.
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