Globally stock markets were slightly higher last week, the standout was China

Goldhub blog

Globally stock markets were slightly higher last week, the standout was China

Adam Perlaky
Manager of Investment Research
World Gold Council

Posted:

Week ending 1 March 2019

  • Broad Markets - Globally stock markets were slightly higher last week, the standout was China +7% with positive US/China trade-related talks. Stocks are climbing to start the week on trade optimism. The 2/10 curve in the US steepened to its highest levels of the year at 20bps. Commodities as a whole fell with the GSCI down 2%, led by oil down 2.5%. The US dollar was flat. President Trump lashed out at Powell and his ‘tightening policies’ over the weekend. Probability of a hike this year is at 8% and a cut at 2%, slightly more hawkish than the previous two weeks. The ECB meeting is this week and probability of a hike on the year is close to 50%. 
  • Gold – Gold was sharply lower last week (LBMA -1.3%, XAU -2.7%) closing strongly to the downside on Friday as the US dollar strengthened and stock markets moved higher
  • Technicals – Gold broke support and is well below the 50-day moving average and $1,300. It stalled at ~$1,350 as we thought might happen and is starting to become slightly oversold. $1,275 is probably the next psychological support level.
  • Flows by time periods – Weekly flows were lower last week -$926mn. This was mostly from North American and Asian Funds. Global funds lost $1.3bn in February driven almost entirely by GLD and Huaan Yifu.
  • Liquidity – COMEX net longs were updated as of 2/22 and we saw and increase in net longs to 531 tonnes, the highest levels since April of last year. Gold market liquidity fell in February from $114bn to $104bn a day versus January. However, Volumes were heavy on the first day of the month at $128bn with the selloff on Friday.