Gold and Silver End of Week Review

The week ahead blends two powerful forces: moderating economic momentum and increasing geopolitical tension. While US and Eurozone data suggest steady but unspectacular growth, rising friction between the US and Iran is injecting a fresh risk premium into energy markets. Macro is softening but geopolitics may dominate price action.

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

AUD/USD has opened with a 1% bearish opening gap, heading toward 0.7000 in a dramatic start to a new week. Risk-aversion remains at full steam after the US and Israel attacked Iran in a coordinated move over the weekend and Tehran retaliated to the attack with force. The higher-yielding Australian Dollar is heavily sold off in Asia.

Markets are likely to open the week with risk-off, with declines led by airlines, cyclicals and trade-exposed names, while energy, defense and “strategic” sectors may be relatively steadier.

The US Dollar’s (USD) upward momentum from the previous week seems to have encountered a tough nut to crack in the 98.00 region, as measured by the US Dollar Index (DXY).

We expect the February employment report to show that January’s robust pace of job growth overstated underlying momentum in the labor market. We look for nonfarm payrolls to rise 45K in February, moderating from its current three-month average pace of 73K (Figure 1).