Gold prices traded higher as the markets’ mood soured in late North American trade on Friday, sending capital fleeing to the relative safety of Treasury bonds and depressing yields. That offered a familiar lift to non-interest-bearing assets epitomized by the yellow metal.
The move may have marked de-risking before the weekend as markets weighed tensions in Syria and seemingly mounting pressure on the White House from Special Counsel Robert Mueller. He is investigating possible links between the Trump campaign and Russian interference in the 2016 election.
Crude oil prices edged gently higher but didn’t make substantive progress, producing a fifth consecutive increase but also marketing the smallest daily gain in the series. Volumes in the bellwether WTI contract fell to a one-week low, perhaps signaling traders’ reticence to participate as geopolitical risk heats up.
SYRIA, US DRILLING AND RETAIL SALES DATA IN FOCUS
From here, soundbites from the Kuwait Oil and Gas Summit may inform bets on the degree to which an increasingly volatile Levant impacts global supply. OPEC Secretary-General Barkindo may try to defuse fears that conflict between proxies of Iran and Saudi Arabia may scuttle coordinated output cut efforts.
Meanwhile, the EIA will publish monthly drilling productivity statistics. If they suggest swelling US extraction will dull the impact of any geopolitically-linked disruptions, crude oil prices may turn lower. Baker Hughes data put the number of active oil rigs at a three-year high last week.
As for gold, it may turn lower as investors’ mood brightens despite Western military action against Syrian targets over the weekend. S&P 500 futures are pointing decidedly higher, hinting that bond yields may rise against a broadly “risk-on” backdrop.
US Retail Sales data is expected to show receipts added 0.4 percent in March, snapping a three-month losing streak. A disappointing outcome echoing recent deterioration relative to forecasts in US economic news-flow might cool Fed rate hike bets and limit downside follow-through however.