GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap on the last five days of trading in gold and it’s correlated assets. Gold prices are heading towards a gain of more than $10 on the week, following another five days of trading dominated by global concern over the spread of the Covid-19 coronavirus and the possible economic damage created by both the epidemic and the efforts to contain it.

So, what kind of week has it been?

Gold Prices Rose from the Market Open as Coronavirus Cases Climbed

The front end of this week was low-energy in the gold markets and the flow of relevant news and data was light, setting an environment in which spot prices were supported by demand for safe haven investments while the threat of a global health crisis persisted, but beyond that the yellow metal’s trading was largely determined by the performance of global equity markets.

Around the start of US trading on Monday, gold prices were a few dollars higher on the week following what has become a familiar place setting in recent weeks: higher Sunday evening volatility as global markets grapple with the weekend’s headlines and data around attempts to contain and treat the spread of the novel coronavirus—now designated Covid-19. Gold prices began the US session around $1573/oz and would mostly trade close to that same level through the morning hours amid a very quiet news day.

There were some inklings of stories that looked like they could become drivers for gold prices on the week—would gold and other safe havens turn higher on concerns that the predominant US yield curve would invert? without production cuts, would weakening oil prices drag the whole commodities complex lower? —but none really materialized past Monday’s updates. Gold made a decent attempt to trade above $1575 in the calm of the afternoon but gave it back as US equities rallied to reach new tops to begin the week.

The gold charts’ tug-of-war between global economic (and humanitarian) concerns and a still unbothered stock market proved to be the consistent theme through the trading week.

Global Stocks, Boosted by an Optimistic Fed Chief, Pushed Gold Lower on Tuesday…

No surprise, then, that gold prices softened a bit in the Monday-to-Tuesday overnight sessions as Asian and European stock indices made gains even as concerns about the economic drag created by the Covid-19 crisis continued; although there didn’t appear to be much appetite for selling gold in those markets. The yellow metal’s pricing collapsed during the US morning hours however, as the first of a two-day appearance before Congress for Federal Reserve Chairman Jerome Powell struck a mostly optimistic tone about the continued growth of the US economy.

While gold spot prices moved lower through support at $1570 on bullish optimism, Powell acknowledged the possibility that a potentially global health crisis and the measures required to contain it “could lead to disruptions” of the global economy. The Chairman made sure to confirm that the FOMC’s outlook for unchanged rates through 2020 remains firm, but that reminder of possibly stark downside risks was enough to limit the selling in major safe havens like gold, which found buyers well above $1560. Following a rally from the lows, gold traded flatly along $1567 as another relatively quiet market day closed out with US equities completing a global major-market rally.

…but Gold Prices Benefited from Strong Support All Week

Gold slid lower during Asian markets’ Wednesday business as equities in China, Japan and elsewhere put in another strong performance, but the yellow metal again found buyers and price support above $1560 with room to spare. From there, a brief spike in European markets’ risk-aversion drove gold higher again following data that the European Union’s manufacturing output ended 2019 in a deep slump even prior to 2020’s Covid-19 crisis.

US stocks continuing to move from strength to strength kept an apparent cap on gold’s upside around $1570, but after rallying head of the New York prices were well supported at $1565. Chairman Powell’s second day of congressional testimony pushed much the same positive sentiment as the first, and boosted equities (but also gold price support) further with an added dovish tone while implying that the Chairman sees a case for keeping monetary policy at accommodative levels even if it isn’t cutting interest rates. Untroubled by a third consecutive day of quiet from the news desk, the yellow metal traded calmly within its band and closed at $1566, riding the growing optimism around a receding coronavirus and less-challenging economic recovery phase.

Revised Infection Numbers Staggered Stocks while Gold Drove Above $1575/oz

The struts and scaffolding of optimism ripped away shortly after the global markets re-open, as reports spread that a “reclassification” by Chinese authorities would increase the number of cofired Covid-19 cases to 60,000 globally—a jump of nearly 35%. Gold prices spiked along with other safe havens in a strong flight from risk, rising to-and-through previous resistance at $1570/oz.

The move higher initially saw a bit of resistance from profit takers’ selling, but ultimately gold’s chart moved higher as risk-aversion ran hotter and global equity markets reeled. By the earnest start of European trading hours, gold was trading at $1575 in spot markets. There were mild signs of life from US stocks at the cash market open, likely buoyed by both core and headline CPI inflation numbers slightly outperforming expectations. But the focus of risk markets was held tightly by the suddenly less hopeful outlook around Covid-19, and as it became clear that US stocks were headed for a rough day gold solidified its pricing at $1575 for the day. Indeed, the headwinds of reignited worry, an ugly outlook for near-term oil demand, and the promise of a little less easy money from the Federal Reserve was ultimately enough to drag the major US indices to their first down day of the week while gold ended Thursday just below $1577.

A Quiet End of the Week Sees Global Markets in a Risk-Off Stance

In terms of relevant news and headlines, Friday has been a return to eerie calm. Gold held its levels just north of $1575 through the overnight as Asia markets struggled while European equities eked out some uninspiring gains. It was clear the market was still under a great deal of tension heading into another unknown weekend of developments around the global effort to combat the Covid-19 virus and minimize its economic damage.

That tension broke—to the upside for gold prices—with this morning’s release of new figure on Retail Sales which, while not terribly disappointing, were certainly muted and did reflect an 11-year low point for the apparel component of the retail sector. With little in the way of opposing inputs to focus on, equity markets have seemed committed to a disappointing ending to the week.

U.S. equities fluctuated after steady if uninspiring figures for retail sales and as investors assessed contrasting data from China on how the coronavirus is spreading https://t.co/1WumW5XceX

— Bloomberg (@business) February 14, 2020

From the point that equity futures pulled back from the retail numbers, and with no real expectation for better news out of China, buyers stepped into gold positions. Prices broke above $1580 around the US market open and aside from some brief algo selling on better than expected reads for consumer sentiment, the yellow metal has traded comfortably around $1582/oz on its way into the weekend.

Next Up

The data docket for next week is once again very light. While I expect a few interesting appearances from Fed officials, this of course means that our trading week will once again be driven by the continuing efforts to treat, contain, and minimize that novel coronavirus that has markets and the rest of the world on edge.

For now, enjoy your weekend, traders. Rest up and relax; I’ll see you all back here for Monday’s preview of the next week ahead.