Commodities Brief – Precious metals rally as China returns to the fold

Following a dismal stretch last week, Gold prices recovered off of from a six-month low on Monday, as traders in Asia returned to the physical market as China reopened after the Lunar New Year holiday. Amidst pressure from the rising USD against the euro after worse than expected growth data, Gold prices proved to be a one-way affair, shedding several percentage points. Indeed, China`s absence from the physical market for the Lunar New Year public holiday also pressured gold last week. As of European trading, the yellow metal has fared better, as prices were capped at 1617 region, before waning again to USD $1614.73, up +$5.93 at the time of writing.

In addition, Silver prices faced a similar decline Friday as prices broke below the key 30.70 region/support level and ultimately the psychological 30.00 handle. Presently the white metal has also staged a recovery, regaining the 30.00 level and trading at USD $30.06 during European trading Monday. Any further quantitative easing is seen as positive for gold and silver, which is viewed as a hedge against inflation and currency weakness.

Crude oil prices were roiled Friday, sharing the fate of other precious metals and commodities in a massive sell-off that reflected G20-garnered optimism. The previous sights on the 98.00 level now seem quite distant, however prices recently showed some signs of life and recovered to the USD $95.64 region in these moments. With the United States on holiday given the observance of Presidents Day, trading is expected to be muted across all major commodities.