February 21, 2017

Gold prices ended Friday’s session in the red, after spending most of the day in positive
territory as a raft of disappointing U.S. economic data reduced the probability of an interest
rate hike from the Federal Reserve in the coming months. Gold for December delivery on the
Comex division of the New York Mercantile Exchange jumped to a daily peak of $1,362.50 a troy
ounce, before turning lower to settle at $1,343.20 by close of trade, down $6.80, or 0.5%. U.S.
retail sales were flat in July, the Commerce Department said, disappointing forecasts for a 0.4%
rise and slowing sharply from growth of 0.8% in the preceding month. Meanwhile, the July
reading of the producer price index showed a decline of 0.4%, the largest drop since September
2015 and confounding expectations of a 0.1% gain. Other data released Friday included
business inventories, which rose more than expected in June, and consumer sentiment for
August, which came in below expectations.
Comex, Silver futures for September delivery tumbled 31.7 cents, or 1.58%, on Friday to settle
at $19.70 a troy ounce. On the week, silver lost 11.5 cents, or 0.55%. For the year, the precious
metal is up nearly 26%, boosted by concerns over global growth and expectations of monetary
stimulus. The U.S. dollar index, which measures the greenback’s strength against a tradeweighted
basket of six major currencies, slumped to a more than one-week low of 95.19 in
wake of the disappointing data. It was at 95.68 by late Friday, down almost 0.25% for the day.
Other data released Friday included business inventories, which rose more than expected in
June, and consumer sentiment for August, which came in below expectations. The downbeat
data led investors to push back expectations for the next U.S. rate hike. Fed funds futures are
currently pricing in just a 9% chance of a rate hike by September. December odds were at
around 45%.
Copper for September delivery sank 5.1 cents, or 2.33%, on Friday to end at $2.140 a pound
after touching a session low of $2.135, a level not seen since July 8. For the week, New Yorktraded
copper prices slumped 1.4 cents, or 0.64%, the third weekly loss in a row, amid ongoing
concerns over the strength of China’s economy. Data released Friday showed that Chinese
industrial production gained 6.0% in July, below expectations for 6.1%, fixed asset investment
rose 8.1%, missing forecasts for 8.8%, while retail sales increased 10.2%, a tad worse than
analyst projections of 10.5%. The Asian nation is the world’s largest copper consumer,accounting for nearly 45% of world consumption. In the week ahead, market players will be
turning their attention to Wednesday’s minutes of the Federal Reserve’s July policy meeting for
fresh clues on the timing of the next U.S. rate hike. U.S. inflation data will also be in focus, as
investors attempt to gauge if the world’s largest economy is strong enough to withstand an
increase in borrowing costs in the coming months.
Oil futures soared for the second day in a row on Friday, ending at a three-week high as
investors continued to cover short positions after Saudi Arabia’s oil minister hinted that the
kingdom could be open to discussions next month aimed at stabilizing the market. Crude pared
some gains after a report showed the number of U.S. oil rigs rose for the seventh straight week,
underling concerns over a global supply glut. On the New York Mercantile Exchange, crude oil
for delivery in September rose to an intraday peak of $44.78 a barrel, the most since July 22. It
closed the day at $44.49, up $1.00, or 2.3%. Crude futures spiked nearly 5% on Thursday as
investors returned to the market to cover short positions after Saudi Oil Minister Khalid al-Falih
said OPEC members and non-members would discuss potential action to stabilize oil prices
during a meeting next month in Algeria. OPEC announced that the 14-member bloc will meet
on the sidelines of an energy conference in Algeria from September 26-28, reviving the idea of a
coordinated production cap.

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