Gold prices soared for a fourth consecutive week with the precious metal rallying more than 5% to trade at 1247 on Thursday evening in New York. The advance to fresh yearly highs comes amid the continued rout in global equity markets with weakness in the dollar & falling treasury yields driving demand for the perceived safety of the yellow metal. 

Fundamental Forecast for Gold: Neutral

In her two-day semi-annual Humphrey Hawkins testimony before congress, Fed Chair Janet Yellen maintained that the central bank is staying with a wait-and-see approach as it pertains to normalizing monetary policy while at the same time leaving the door open for further easing. When pressed on the likelihood of negative interest rates, Yellen said that the notion was not, “off the table,” suggesting that the central bank acknowledges the recent slump in global markets and is ready to take further accommodative measures if necessary. Ironically, the remarks come less than two months after the Fed moved to hike rates for the first time in nearly a decade.

Further evidence of growing global growth concerns were apparent this week with the Swedish Riksbank deciding to cut interest rates deeper into negative territory. The move comes amid continued easing measures from global central banks – offering a tailwind to gold prices as uncertainty & tightening global growth fuel haven flows into the lower yielding, “safer” assets as a store of wealth.

As rate expectations from the Fed are pushed out further, look for persistent weakness in the dollar and increased volatility in broader risk markets to help prop-up bullion prices. Heading into next week, traders will be closely eyeing U.S. data with housing starts, building permits and industrial production data on tap. The January CPI figures highlight the docket next week with consensus estimates calling for core inflation to hold at 2.1% y/y. With the US labor market close to the Fed’s “natural rate” of unemployment, the inflation figures have become increasingly important as Yellen & company remain committed to achieving the dual mandate of fostering maximum employment & price stability.