Headline inflation in the US rose +2.9% y/y in January, compared with consensus of +2.8% and December's +3.0%. Earlier this month, US data released came in better than expected. US' initial jobless claims surprisingly fell -10K to 348K in the week ended February 11. The market had anticipated a rise to 364K. The 4-week moving average fell -2K to 365K, the lowest reading since March 2008. Moreover, continuing claims declined -100K to 3426K, following a downward revision, following upward of the previous week's number to 3526K Regarding the property market, housing starts climbed +42K to 699K in January, compared with consensus of a drop to 364K. Building permits slipped to 676K from 679K, compared with market expectations of 670K. Philly Fed Survey unexpectedly soared to 10.2 in February from 7.3 in the prior month. US President Barack Obama also stated that 'People are starting to get a sense that the economy is on the rebound'. Indeed, after the release of January FOMC minutes, the market saw lower chance of QE3.

WTI crude oil jumped to a 9 month high of 104.14 before ending the week at 103.24. The prompt month contract gained +4.63% during the week as driven by stronger-than-expected US data and unexpectedly decline in oil inventory. Brent crude oil also soared almost +2.0% although the Greek rescue deal dragged on. Tensions over Iran intensified. Last week, there was conflicting news about oil exports from Iran to Europe. It was reported that Iran had decided to halt the supply of its crude to Europe before EU sanctions came into effect. However, it was denied by both spokesmen of both parties.

Saeed Jalili, Iran's top nuclear negotiator, wrote a letter last week to the EU's foreign policy head Catherine Ashton to seek negotiations about its nuclear program at the 'earliest possibility'. US' Secretary of State Hillary Clinton and Ashton said they and allies are reviewing the letter to determine next steps.

How the situation evolves remains highly uncertain and military actions from either side cannot be ruled out. This should continue to support oil prices.

Natural gas jumped on Friday as driven by encouraging US economic data. The DOE/EIA reported that gas inventory dropped -127 bcf to 2 761 bcf in the week ended February 10. Stocks were +817 bcf above the same period last year and +765 bcf, or +38.3%, above the 5-year average of 1 996bcf. Separately, Baker Hughes reported that the number of gas rigs fell -4 units to 716 in the week ended February 17. Oil rigs climbed +9 bcf to 1 272 units and miscellaneous rigs stayed unchanged at 6, sending the total number of rigs to 1 994 units. Directionally oriented combined oil, gas, and miscellaneous rigs fell -1 units to 216 while horizontal rigs decreased -8 units to 1 163 and vertical rigs rose +12 units to 615 during the week.

Gold spent another week consolidating within a range of 1700 and 1750. Renewed tensions in the Eurozone amid the delay of the Greek bailout plan failed to drive demand for gold as safe-haven asset. Meanwhile, the US dollar strengthened due to better-than-expected US economic data and FOMC minutes. The market appeared to have priced in a lower chance of QE3 after the Fed changed workings in the minutes for the January meeting. This has also reduced the appetite for the yellow metal.

Global macroeconomic uncertainty continues to support gold prices in the medium-term. Although recent data released in the US has improved, unemployment rate remains elevated and the US government is expected to implement stringent fiscal consolidation this year. The push back of the first rate hike in January signaled policymakers' concerns over economic growth. In short, prolonged low interest rates should benefit gold.

Also positive for the yellow metal is net buying from the official sector. European central banks are substantial holders of gold. For instance, Italy, the world's third-largest national holder of gold, holds 2451.8 metric tons, making up 71% of its total reserves. There have been speculations debt-ridden European economies may dispose of their gold holdings to repay their debts, this may not be in the government's agenda indeed. The use of gold proceed to repay debts will weaken balance sheets by switching out a hard asset. Moreover, notwithstanding the substantial gold holdings, they represent only a small percentage of debts in many European countries. For example, Italy's total gold holdings, upon sales, would yield around $130 B representing just 6% of Italy's debt. For Greece it total gold holdings of 111.6 metric tons would yield a dollar value of $6B, or around 1% of its debt.