Gold Rally Slows as U.S. Equities Remain Firm

Gold closed lower on Friday after reaching its highest level since February 8 earlier in the session. Nonetheless, it still managed to close higher for the third straight week. The biggest influence on the market was the movement in the U.S. Dollar, which recovered after a sharp break on Thursday.

Investors are buying gold in anticipation of volatility due to the global political climate. The uneasiness on the political front over Trump’s policies and the upcoming elections in Europe especially in France is helping to generate support for safe-haven assets.

Investors continue to pour money in gold ETFs. The buying has been consistent this year, but cautious. The hesitation for some buyers is coming from uncertainty over Fed policy. The most aggressive buying is coming from investors betting on turmoil from the European elections and the Fed passing on a March rate hike.

Crude Oil

U.S. March West Texas Intermediate Crude Oil finished Friday’s session slightly higher, but inside the previous day’s range. The market was capped by a stronger U.S. Dollar, rising drilling and record stockpiles. Underpinning prices were increasing compliance with OPEC’s plan to cut daily production and reduce the global supply glut.

Oil Services firm Baker Hughes added oil rigs for a fifth straight week, helping support the possibility of rising U.S. stockpiles. Meanwhile, estimates suggest compliance by OPEC is around 90 percent. There is also talk circulating that OPEC could extend the pact to curtail daily production if the current pact doesn’t drop inventories to the initial targeted level.

U.S. Treasurys

U.S. government Treasury Notes and Bonds traded higher on Friday as investors continued to worry about the outcome of France’s presidential election ahead of the U.S. bank holiday on Monday. The growing strength of far-right candidate Marine Le Pen is sending investors into safe-haven assets like gold and U.S. Treasurys. Rising T-Bonds and T-Notes push interest rates lower.

U.S. Stocks

The three major U.S. equity indexes managed to eke out another high close on Friday, however, volume and volatility were relatively light. The NASDAQ Composite once again posted a new record high.

The NASDAQ was the only index to post a new record high with investors looking a little cautious ahead of the long U.S. holiday week-end and continued worries over the elections in the Netherlands and France.

According to recent polls, Marine Le Pen, France’s far-right, anti-European Union candidate, is the favorite to win the first round of voting scheduled for April, but no one is sure if she’ll have enough support to win the general election in May. Nonetheless, just winning the primary election is enough to raise concerns amongst investors.