Cooling Growth, Rising Risk, and the $5,000 Gold Test (week ending 2.20.26)

Monday (2.16.26): US markets closed - Presidents Day.

Tuesday (2.17.26): Gold and silver are getting hit hard Tuesday, with short-term traders heading for the exits and locking in profits. April gold slid $141 to $4,904, while March silver dropped over $4 to $73.66. A stronger U.S. dollar and softer crude oil added extra pressure, giving metals little room to breathe in this holiday-shortened week. Meanwhile, the U.S. and Iran are back at the negotiating table in Geneva for nuclear talks — dialing down immediate geopolitical tension and taking some shine off safe-haven demand. No breakthrough yet, but even the hint of diplomacy was enough to cool the metals trade.

Wednesday (2.18.26): Gold and silver are making a flashy comeback at midday Wednesday, bouncing hard after Tuesday’s drop as traders scoop up what they see as bargain prices. April gold jumped $116 to $5,022, while March silver surged $4.30 to $77.81. Now all eyes are on the Fed’s FOMC minutes dropping this afternoon. The central bank held rates steady in January, but the real question is what comes next. Fed Governor Michael Barr is preaching patience, saying rates should stay put until inflation clearly heads toward 2%. Chicago Fed’s Austan Goolsbee? A bit more flexible — hinting rate cuts could still be on the table this year if inflation behaves. Translation: if the Fed tilts dovish, metals could get an extra tailwind.

Thursday (2.19.26): Gold and silver are inching up around midday Thursday as markets take a breather, gripped by fears of a U.S.–Iran conflict and hawkish Fed signals that could cut into bullion’s shine; April gold was up about $9 around $5,018 and March silver added roughly $0.42 near $78 as traders balanced geopolitical risk with the latest Fed minutes showing policymakers ready to tighten if inflation sticks high, and Axios and CNN warned that full-scale U.S. strikes on Iran could be imminent if diplomacy stalls.

Friday (2.20.26): Gold’s up, silver’s up, and markets are jittery — traders are snatching safe havens as Washington piles forces toward Iran and a clash feels like it could erupt any day, with President Trump giving Tehran just a short window to cut a nuclear deal or risk conflict. The dollar’s flexing on bets against Fed cuts while geopolitical fear flows boost it, crude is near multi-month highs on supply-risk worries, and even Supreme Court tariff noise hangs over markets.

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Gold jumps above $5,060 as U.S. business activity cools

The big picture
Spot gold surged to fresh session highs above $5,060 per ounce after weaker-than-expected U.S. flash PMI data signaled the slowest pace of business expansion in ten months.

Driving the news
S&P Global’s February flash Composite PMI fell to 52.3 from 53.0 in January, missing expectations and reflecting softer demand across both manufacturing and services. Orders declined, job growth slowed, and businesses cited high costs, tariffs, and supplier price hikes. While extreme weather may have played a role, the broader message pointed to cooling momentum in early 2026.

By the numbers
• 52.3 — February flash Composite PMI (down from 53.0; below 52.6 forecast)
• 52.3 — Services PMI (down from 52.7; below 53 expected)
• 51.2 — Manufacturing PMI (down from 52.4; below 52.6 forecast)
• $5,060.25 — spot gold price after the release (up 1.28%)
• 1.5% — implied Q1 annualized GDP growth based on PMI data

Why it matters
The data suggests economic growth is cooling more sharply than expected, potentially increasing the appeal of safe-haven assets like gold. At the same time, input costs rose at the fastest pace since August, reflecting tariff and wage pressures — a reminder that slower growth and sticky inflation can coexist, complicating the Federal Reserve’s policy path.

What to watch
• Whether future PMI readings confirm a broader economic slowdown
• Inflation pressures tied to tariffs and supplier costs
• Upcoming hard data (jobs, inflation, GDP) to validate soft survey signals
• Gold’s ability to hold gains above the $5,000 level

The bottom line
Weaker business activity boosted gold as traders recalibrated growth expectations, but sticky input costs underscore the Fed’s dilemma — slower growth without clear inflation relief could keep markets volatile in the weeks ahead.

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Trump could strike Iran within days — what’s at stake for oil markets

The big picture
President Trump is weighing potential military strikes against Iran within the next 10 days, raising fears that a broader conflict could disrupt global oil flows and trigger a sharp spike in crude prices.

Driving the news
Oil prices have already climbed more than 5% this week as traders price in the risk of escalation. The core concern is the Strait of Hormuz — a vital chokepoint for global energy trade — where Iran’s Revolutionary Guard has signaled it could restrict commercial traffic if ordered. Analysts warn that even a temporary disruption could rattle shipping insurance markets and significantly tighten global supply.

By the numbers
• 14+ million barrels per day — oil flowing through the Strait of Hormuz in 2025
• ~33% — share of total global seaborne oil exports passing through the strait
• 75% — portion of that oil headed to China, India, Japan, and South Korea
• $100+ per barrel — potential crude price in a prolonged closure scenario
• $10–$15 per barrel — projected jump in a wider U.S.–Iran conflict (Rystad estimate)
• $8 per barrel — potential increase if 1 million bpd of Iranian exports are lost for a year (Goldman Sachs estimate)

Why it matters
Global energy markets cannot easily rebalance without Hormuz flows. A prolonged disruption could push oil above $100, dampen demand, and risk tipping the global economy toward slowdown. At the same time, some analysts believe any U.S. action would likely be surgical and designed to avoid directly targeting Iran’s oil infrastructure, limiting long-term supply damage.

What to watch
• Whether U.S. strikes remain limited or escalate into broader regional conflict
• Signs of sustained shipping or insurance disruptions in the Strait of Hormuz
• Iranian retaliation targeting energy infrastructure or commercial vessels
• Oil market response relative to current “moderate escalation” pricing

The bottom line
Markets are pricing in elevated risk but not full-scale supply collapse. A contained strike may trigger only a temporary oil rally — but a prolonged Strait of Hormuz disruption would likely send crude sharply higher and ripple through the global economy.

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FOMC minutes show a Fed confident in labor stability but uncertain about inflation, and increasingly divided on the rate path

The big picture
Minutes from the January 27–28 FOMC meeting show a Federal Reserve that sees the labor market stabilizing and growth holding up—but remains uncertain about the inflation trajectory and increasingly divided over the appropriate path for interest rates.

Driving the news
Fed staff projected real GDP continuing to expand slightly below its 2024 pace, with unemployment expected to drift lower and remain below its estimated natural rate through 2028. However, inflation remained somewhat elevated, with tariff-driven core goods inflation offsetting ongoing disinflation in core services. While most officials supported holding rates steady, two dissented in favor of a quarter-point cut, and several members argued future policy risks should be described as “two-sided,” leaving the door open to hikes if inflation persists.

By the numbers
• 2% — Fed’s longer-run inflation target, still unmet since early 2021
• 1/4 percentage point — rate cut favored by two dissenting members
• 2028 — year through which GDP is projected to outpace potential growth
• $4,976.42 — spot gold price following the minutes release (up 2.02%)

Why it matters
The Fed’s outlook reflects a rare combination of projected above-trend growth and easing inflation—an outcome some economists view as optimistic. Risks to growth were described as skewed to the downside, while inflation risks were seen as skewed to the upside, highlighting policy tension. Financial stability concerns—high asset valuations, tight credit spreads, hedge-fund leverage, and AI-related investment concentration—add another layer of complexity.

What to watch
• Whether inflation meaningfully resumes its disinflationary trend by mid-year
• Signals in the March 18 Summary of Economic Projections
• Evidence of financial-stability stress in credit or Treasury markets
• Timing of the next potential rate cut, with June seen by some as the earliest window

The bottom line
The Fed appears comfortable with labor stability and resilient growth, but inflation uncertainty and internal divisions suggest monetary policy remains finely balanced—leaving markets sensitive to every incoming data point and policy signal.

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U.S. trade deficit totaled $901 billion in 2025 despite Trump’s tariffs

The big picture
The U.S. trade deficit reached $901.5 billion in 2025, essentially flat from the prior year, underscoring how aggressive tariff policies failed to meaningfully narrow the long-standing trade imbalance.

Driving the news
December’s goods and services deficit widened sharply to $70.3 billion, far exceeding expectations, as companies adjusted to a year marked by sweeping tariffs, shifting negotiations, and early front-loading of imports ahead of new duties. While President Donald Trump imposed a 10% blanket tariff and additional reciprocal levies, many measures were later softened, and trade talks remain ongoing.

By the numbers
• $901.5 billion — total U.S. trade deficit in 2025
• 0.2% decline — year-over-year reduction from 2024 (down $2.1 billion)
• $70.3 billion — December trade deficit, up $17.3 billion from November
• $3.43 trillion — total exports in 2025 (up $199.8 billion from 2024)
• $4.33 trillion — total imports in 2025 (up $197.8 billion)
• $218.8 billion — goods deficit with the European Union (largest)
• $202.1 billion — goods deficit with China
• $196.9 billion — goods deficit with Mexico

Why it matters
Trade deficits influence currency flows, domestic manufacturing competitiveness, and political narratives around economic sovereignty. The near-unchanged deficit suggests structural forces—global supply chains, consumer demand, and relative growth rates—may outweigh short-term tariff strategies.

What to watch
• Whether tariff negotiations meaningfully alter trade flows in 2026
• Import trends after front-loading effects fade
• U.S.–EU and U.S.–China trade dynamics
• Dollar strength and its impact on export competitiveness

The bottom line
Despite aggressive tariff moves and a volatile global backdrop, America’s trade gap barely budged in 2025—highlighting the difficulty of reshaping trade balances through policy shocks alone.

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NEXT WEEK’S KEY EVENTS

Economic Calendar: February 23 – February 27, 2026 (ET)

MONDAY, Feb. 23
• 8:00 am — Fed Governor Christopher Waller Speaks

TUESDAY, Feb. 24
• 8:00 am — Chicago Fed President Austan Goolsbee Speaks
• 9:00 am — S&P Case-Shiller Home Price Index (20 Cities) (Dec.)
• 9:00 am — Atlanta Fed President Raphael Bostic Speaks
• 9:30 am — Fed Governor Lisa Cook Speaks
• 10:00 am — Consumer Confidence (Feb.)

WEDNESDAY, Feb. 25
• 9:35 am — Richmond Fed President Tom Barkin Speaks

THURSDAY, Feb. 26
• 8:30 am — Initial Jobless Claims (Feb. 21)

FRIDAY, Feb. 27
• 8:30 am — Producer Price Index (Delayed Report) (Jan.)
• 10:00 am — Construction Spending (Delayed Report) (Nov.)

NA — Not available

IMPACT ON PRECIOUS METALS MARKETS

Christopher Waller Speaks (Mon, 8:00 am ET)
• Hawkish commentary → reinforces higher-for-longer rate expectations; bearish for gold/silver.
• Dovish tone → supports easing narrative; bullish for metals.
Fed communication can shift rate expectations; moderate to high impact depending on policy signals.

Austan Goolsbee Speaks (Tue, 8:00 am ET)
• Hawkish remarks → strengthens restrictive policy outlook; bearish for metals.
• Dovish remarks → boosts easing expectations; bullish for metals.
Markets parse Fed speeches closely for forward guidance; moderate impact.

S&P Case-Shiller Home Price Index (Tue, 9:00 am ET)
• Rising home prices → housing resilience, inflation stickiness narrative; mildly bearish for metals.
• Cooling or falling prices → housing slowdown concerns; mildly bullish for metals.
Home prices influence inflation and growth expectations; moderate relevance.

Raphael Bostic Speaks (Tue, 9:00 am ET)
• Hawkish stance → supports tighter policy expectations; bearish for metals.
• Dovish stance → signals policy flexibility; bullish for metals.
Speech impact depends on clarity of policy guidance; moderate impact.

Lisa Cook Speaks (Tue, 9:30 am ET)
• Hawkish tone → reinforces real-rate pressures; bearish for gold/silver.
• Dovish tone → supports softer rate outlook; bullish for metals.
Fed governor commentary often carries weight; moderate to high impact.

Consumer Confidence (Tue, 10:00 am ET)
• Improving confidence → stronger spending outlook; bearish for metals.
• Falling confidence → consumer caution narrative; bullish for metals.
Sentiment influences growth expectations; moderate impact.

Tom Barkin Speaks (Wed, 9:35 am ET)
• Hawkish commentary → reinforces restrictive policy narrative; bearish for metals.
• Dovish commentary → supports easing bias; bullish for metals.
Regional Fed president remarks can move markets if policy signals are clear; moderate impact.

Initial Jobless Claims (Thu, 8:30 am ET)
• Rising claims → labor market softening narrative; bullish for metals.
• Persistently low claims → labor strength supports tighter policy outlook; bearish for metals.
High-frequency labor data closely watched; moderate impact.

Producer Price Index (Fri, 8:30 am ET)
• Hot producer inflation → upstream price pressures; bearish for metals.
• Cooling PPI → easing inflation narrative; bullish for metals.
Inflation-sensitive release; moderate to high impact depending on surprise.

Construction Spending (Fri, 10:00 am ET)
• Rising spending → growth resilience signal; mildly bearish for metals.
• Weak spending → growth concerns; mildly bullish for metals.
Construction reflects broader economic momentum; moderate relevance.