Gold Soars, Natural Gas Firms, Crude Oil Steadies

Commodities posted solid gains on Friday led by a surprisingly strong rally in gold futures, which seemingly came out of nowhere. Natural gas posted a strong percentage gain, but this wasn’t much of a surprise because it’s bitterly cold in several key U.S. demand areas. Crude oil also finished positive, helped by political and economic turmoil in Venezuela.

Gold

Gold futures soared on Friday in reaction to a steep drop in the U.S. Dollar. The greenback fell in reaction to a report that the U.S. Federal Reserve planned some dovish changes to monetary policy while leaving interest rates unchanged.

On Friday, April Comex gold settled at $1304.20, up $18.30 or +1.42%.

According to The Wall Street Journal, Federal Reserve officials are nearing a decision on when to end the reduction of the Treasury bonds it is holding on its balance sheet, a key consideration for investors watching how far the central bank will go in tightening monetary policy. A looser policy is bearish for the U.S. Dollar and bullish for dollar-denominated gold.

It’s not a given, just speculation at this time. However, The WSJ went on to say that further consideration of when to end the roll-off is likely to come up at the next Federal Open Market Committee meeting on January 30.

“A lot of the heavy lifting has been done,” Kansas City Fed President Esther George told The Wall Street Journal in a January 15 interview. “We’re waiting for the committee to be satisfied that they have reached sufficient understanding of what all the moving pieces are.”

Natural Gas

Natural gas futures closed higher on Friday amid forecasts for another Arctic blast over the week-end and into the end of January. Speculators also may have priced in a new forecast calling for another round of frigid temperatures into February. Helping to limit gains was a weak performance in the spot market.

Potentially bullish comments from Bespoke Weather Services were supportive throughout the session. “However, through the week it became clear that the cold shot to close out January and bring in February was the real deal, and also that cold risks can easily return into the middle of February,” Bespoke Weather Services said.

On Friday, March natural gas settled at $3.072, up $0.074 or +2.47%.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures closed higher on Friday amid worries over a supply disruption due to the political and economic turmoil in Venezuela. Gains were limited, however, by concerns over rising U.S. fuel inventories and a global economic slowdown.

On Friday, March WTI crude oil settled at $53.69, up $0.56 or +1.05% and March Brent crude oil closed at $61.64, up $0.55 or +0.89%.

Specifically, short-sellers were encouraged to cover positions after the U.S. signaled it may impose sanctions on Venezuelan exports. However, buyers were spooked by uncertainty over U.S.-China trade relations and the acknowledgement of economic weakness from major central banks.