Negative signal for gold | 26 February 2021

#WTI:

The energy crisis is intensifying in the USA! After an unseasonably warm start to the 2020/21 winter, a hail of snow storms has descended upon the central and eastern United States in recent weeks. In Texas’ case, the freeze was so bad and unexpected, that oil and gas couldn’t flow like normal in key production basins. The oil production fell by 1 million bpd. This is a positive signal for oil prices. Reports that Iran will “immediately reverse” actions in its nuclear program when U.S. sanctions are lifted, as assured by its foreign minister, pressured crude lower. This is a negative signal for oil prices.

Trading recommendation: range 58.20 -60.90.

#SP500:

The Federal Reserve had already warned, in the minutes from its January policy meeting, that the labor market would take time to return to trend and thus its easy monetary policy would stay in place for a considerable period. And Treasury Secretary Janet Yellen made it clear that $1.9 trillion in pandemic-relief spending is still needed, defending the need for President Joe Biden’s plan despite the recent strength in retail sales. “It’s very important to have a big package that addresses the pain this has caused,” Yellen said on CNBC. “The price of doing too little is much larger than the price of doing something big”. The new anti-crisis program will have a positive impact on the capitalization of the US stock market.

Trading recommendation: Buy 3885 and take profit 3969.

XAUUSD:

The yield on US 10-year government bonds is approaching an annual high, which is negative for gold. There is a simple rule in the market: the smaller the difference between bond yields and inflation in the United States, the cheaper gold is. If in the summer, when gold set a historical maximum, the difference between the two indicators was 0.7%, now it is 0.05%. If the indicators equalize in March, then this will provoke large-scale sales of the precious metal! The geopolitical risk component that has held up gold for decades has almost vanished too, with the yellow metal falling instead of rising from a recent flare-up in Middle East tensions.

Trading recommendation: Sell 1799 and take profit 1760.