Market Update February 20 – No Peace in Sight for Middle East

Middle East - The crew of a commercial ship was forced to abandon their vessel due to a Houthi missile attack in the Red Sea. This is a significant event because it marks the first crew evacuation since the militant group began threatening the vital trade route late last year and it encourages Houthi rebels to continue their attacks. 

Public tensions persist between Israel and the US over the Gaza conflict. The US has proposed a UN Security Council resolution warning Israel against assaulting Rafah in southern Gaza, calling for a temporary cease-fire. Israeli Prime Minister Benjamin Netanyahu, however, vows to push forward, ignoring repeated warnings from the US and other ally countries.

Ukraine - Russian forces have recently gained ground in Ukraine. Delays in financial aid from the United States are causing worry, and NATO countries have expressed concerns about the reliability of continued US support in the region that they have traditionally relied upon.

Domestic US - The US Dollar has fallen by 0.5% since last week but remains above 104 on the US Dollar Index (DXY). Investors await the release of the most recent Fed meeting minutes, with a lower likelihood of a rate cut in May. Instead, a 75% chance is priced in for a first cut in June.

Gold Market - Outflows in North American gold and silver ETFs accelerated in January. However, despite ETF holdings being at their lowest since January 2020 (pre-Covid), gold and silver are both enjoying modest rallies at the moment, with gold up 2% and silver up over 4% over the past week. 

Ending on a positive note for gold, during the first month of 2024, wholesale gold demand in China recorded its strongest January ever, lifting the local gold price premium. Meanwhile, the People’s Bank of China extended their gold buying spree to 15 months, and gold ETFs in China once again attracted inflows.

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Mark Yaxley, CEO of Strategic Wealth Preservation (SWP), began his journey in precious metals with Kitco Metals in 2006. Co-founding SWP in 2014, he now guides individual and commercial clients towards their investment goals. Renowned for his 'Inside the Vault' YouTube series, Mark has helped millions gain insights into gold and silver bullion ownership.