Gold had its best week in seven months as investors worried about President Trump, his approach to policy making, a stronger than expected jobs report for the US for January, and a weaker US dollar.
Moves by Trump to ease regulations on the finance and banking industry had no impact on gold (but on Wall Street).
As a result Comex April gold rose $US1.40, or 0.1%, to settle at $US1,220.80 an ounce. The price intraday low of $US1,208.30 earlier after its settlement on Thursday at $US1,219.40, marking the best level since mid-November.
For the week, prices climbed 2.4%, the strongest since the week of June 10 last year.
Earlier in the week, the Federal Reserve said it would leave interest rates unchanged and investors are now looking to the Congressional appearance on February 15 of Fed chair, Janet Yellen who may provide more clarity on the central bank’s thinking on rates.
News that the US created 227,000 jobs in January had no real impact – wage growth was weaker than expected and the jobless rate rose to 4.8% from 4.7% as more people were looking for work.
Hiring at the end of 2016, meanwhile, was a touch slower than previously reported.
The government said 157,000 new jobs were created in December instead of 156,000, but November’s 204,000 was chopped to 164,000. Looked at another way, the 227,000 jobs in January was really only 186,000 with those revisions.
Hourly pay increased 2.5% from January 2015 to January 2016, down from 2.8% in December, suggesting that inflation may not be as brisk as the Federal Reserve or the market had been pricing in.
Rounding out action for the Comex, March silver futures rose 5 cents, or 0.3%, to settle at $US17.479 an ounce, up 1.7% for the week.
March copper fell 7 cents, or 2.6%, to $US2.616 a pound—down 0.2% for the week. That followed a rise in Chinese money market interest rates and no real change in the start of month surveys of the country’s manufacturing activity.
Oil futures saw a small rise on Friday to finish higher for the week, supported by more data backing up production cuts by major oil producers.
But prices show little reaction to news that the US has imposed sanctions on Iran, one of the world’s top 10 crude-oil producers, over a missile test.
But the gorilla in the room – the level of US oil production – continues to concern the market.
Figures in the weekly Baker Hughes oil rig report on Friday which revealed a third straight weekly rise in the number of active domestic oil rigs.
The number of active US rigs drilling for oil rose by 17 to 583 this week. And the total active US rig count, which includes oil and natural-gas rigs, also rose by 17 to 729, according to Baker Hughes.
In fact US oil rig use has risen by 61 or more than 10% in the past three weeks.
According to the US Energy Information Administration’s latest forecast, American crude-oil production will rise from an average of 8.9 million barrels a day in 2016 to 9.3 million barrels a day in 2018.
US oil stocks rose by 6.5 million barrels in the latest week, which was also a shock to the market.
In New York March West Texas Intermediate crude tacked on 29 cents, or 0.5%, to settle at $US53.83 a barrel. For the week, prices gained around 1.2%.
In London the US April Brent crude the global oil benchmark, rose 25 cents, or 0.4%, to $US56.81 a barrel prices about 2% higher on the week.
Data from the Russian Energy Ministry showed the country’s production of oil and condensate dropped by around 100,000 barrels a day in January from the previous month. The report raised hope that oil-producing nations beyond OPEC are adhering to a deal that calls for a collective reduction in output of 1.8 million barrels a day, or roughly 2% of the world’s daily production.
Data on OPEC’s January production will be released in the next two weeks. OPEC is scheduled to meet in June to review the effectiveness of the pact and could suggest extending the deal for more months.
