Gold began the new year strong, continuing its upward trend which started in December. The metal finished up 3.0% at $1,320.00 in January, breaking the $1,300.00 threshold for the first time since July. Silver broke the $16.00 threshold for the first time since July as well, finishing up 3.6% at $16.06. Platinum and palladium rose 3.3% and 6.2% respectively.
The US dollar declined 1.3% in January, mainly driven by the ongoing US Government shutdown, which lasted a record 35 days. Congress’s inability to come to a resolution for such an extended period illustrated the current polarization of Washington, causing an influx of volatility in currency markets. This increased volatility helped push gold to a 6-month high.
Coming off their worst month in recent history, it is not surprising that US equities performed exceptionally well in January. Even with increased uncertainty because of the shutdown and increasing trade tension with China, stocks still managed to have their best January since 1987. Generally, positive 2018 Q4 earnings results outweighed investors’ fears regarding the state of the US government and US-China trade relations.
Precious metals and stocks both benefited from the Federal Reserve’s tone regarding interest rates for 2019. Fed Chair Jerome Powell put forth a much more dovish attitude regarding rate hikes in January than had been seen in 2018. The Fed’s policy for 2019 is shaping up to be one of the most important factors dictating metal prices going into future months.