The President’s Day weekend is a family holiday in the United States where many businesses and schools close. When my boys were in school, it was a weekend that took us to Vermont for skiing at the height of the season when the conditions were prime for conquering the slopes.
While many Americans were enjoying the holiday on Monday that honors George Washington, Abraham Lincoln and the past leaders of the United States, there was no rest for the gold and crude oil futures markets which are global.
On Monday, February 19 the price of crude oil continued its recovery from the Christmas Eve low at $42.36 per barrel and moved to yet another new high for 2019 at $56.33.
As the daily chart highlights, the price of the NYMEX futures was over the $56 per barrel level late Monday. At the high on the continuous contract on the first trading day of this week, the price of the energy commodity is almost 33 percent above its December 24 low.
At the same time, another high-profile commodity market made strides on the upside on Monday. The price of gold traded to a peak at $1330.80 which was just 30 cents below its 2019 peak on January 31. Last week, the price of the yellow metal traded all the way down to a low at $1304.70 on February 14. However, the lack of love for the gold market on Saint Valentine’s Day quickly disappeared, and now gold is just under its highest price since back in April and May of 2018.
The strength in the crude oil and gold markets could be a warning sign for markets across all asset classes over the coming days and weeks. Both the metal and energy commodity that powers the world are barometers of inflationary pressures. At the same time, the dollar index is not far off its mid-December high which tends to be a bearish factor for both gold and oil. Therefore, the price action in the two high-profile commodities on Monday was a significant event, and it will be worth watching if they can continue their upside ascent in the coming days and weeks. The target for crude oil is at the 50% retracement level of the move that took the price from $76.90 in early October to a low of $42.36 in late December which stands at $59.63 per barrel.
Meanwhile, in gold, the $1365.40 double top formation from 2018 stands as the first line of technical resistance below the critical level at the 2016 peak at $1377.50 per ounce. If gold and oil rise above technical resistance levels, watch out because it could mean an increase in volatility in markets across all asset classes as inflation could be rearing its ugly head.