Friday was not just about weaker data from the US due to a sharper than expected decline in retail sales. It was mainly about a significant markdown of gold. In the background, Romania keeps its interest rates steady, as it waits for the situation at home and abroad to calm down.
US Economy
Friday was mainly about data on retail sales and industrial production in the world’s largest economy. Retail sales are rising annually by 4.2%, which is objectively a good result. The problem is that expectations in January talked about a decrease of 0.1% on a monthly basis. A decline after December is not surprising – the problem is that it was 0.9%, which is clearly more than assumed. Industrial production, on the other hand, increased by 2% annually. These were better data than predicted. The market’s reaction was quite predictable. It’s great that more is being produced, but what’s the point if people aren’t buying and it all ends up in warehouses. Friday was the first day since the end of January when one had to pay more than 1.05 USD for 1 EUR.
Gold and Valentine’s Day
It would seem that Valentine’s Day would be a good time for the gold market. At least for the jewelry part of it. However, things turned out differently. Friday saw a markdown of over 2%. To better understand what happened, one should look at the chart. Since the turn of the year, we have had a very clear and stable upward trend, which has led to a rise in prices from around 2650 dollars per ounce, and at one point even over 2950 dollars. After such a strong move, a 60 dollar correction should not be particularly surprising. Some investors have been wondering for some time when there would be a moment to realize gains, and Friday was the day. Interestingly, even despite this correction, the past week was the seventh consecutive week of rising gold prices.
Romania Keeps its Interest Rates
On Friday, the Romanian central bank decided to keep interest rates at their current levels. From peaks amounting to 7%, we have only had two meetings during the holidays where rates were cut by 0.25%. The reason was the inflation rate dropping to around 5%. The problem is that the price increase has stopped around these levels, which has resulted in further cuts being suspended. Analysts point to two additional reasons besides inflation. One of them is political instability in the country. It should be remembered that this country annulled the last presidential elections in December 2024. The President resigned last week and the Speaker of the Senate temporarily acts as President. The second and equally important reason are speculations about the possible impact of sanctions on inflation.
Today it is President’s Day in the USA, days off in the USA often – as is the case today – means lack of significant economic data in the calendar.
Maciej Przygórzewski – Senior Analyst at InternetowyKantor.pl
Source: https://managerplus.pl/slabsze-dane-z-usa-i-przecena-zlota-10781
