Although the gold price is not literally being held captive by anyone, it somehow almost feels that way when looking at the chart, with gold now trading sideways for some time and unable to break out sustainably to either the upside or the downside. This is especially true when looking at other segments of the financial markets, be it the bond or equity markets or the trading venues for other commodities: There has been quite a bit of movement there, while quotes for gold remained in a relatively narrow range of less than $100 per ounce from the time of writing these lines last week until last night, before slipping somewhat more sharply overnight.
Energy prices drive rate expectations
The headwinds for the precious metal persist: High prices for energy commodities such as crude oil and natural gas raise concerns about a further rise in inflation rates around the globe. Brent crude is trading above the $112 per barrel mark this morning, and prices for natural gas futures on the Dutch exchange TTF climbed to their highest level since the end of 2022. This keeps expectations of further central bank rate hikes elevated in the interest rate futures markets: Three hikes of 0.25 percentage points each are being priced in for the Fed through summer 2027, and two for the ECB. After an extended pause, rate hikes are now also expected for the United Kingdom, Sweden and Canada as early as the meetings over the next two weeks. Government bond yields therefore remain elevated. The same applies to the US dollar, which rose to a 17-month high against the euro last week.
Safe haven: demand supports gold
On the other hand, yields on US and German government bonds, for example, have recently eased somewhat. This is partly because the bonds of some countries continue to benefit from their status as a “safe haven” and were therefore in demand amid at times somewhat more turbulent price movements in equity markets. This should also apply to gold itself, which continues to be regarded as a “safe haven” in the financial markets. In addition, demand from China, demand for ETCs, which had risen to a record level in the third quarter, and demand from central banks currently appear to be preventing gold from sustainably falling below the $4,000 per ounce mark.
Gold price: recovery and renewed setback
Last Wednesday afternoon, following unexpectedly high US inflation data, gold was trading at around $4,095 per ounce. As early as Thursday in Asian trading, quotes climbed back to $4,160 per ounce. On Friday, gold even reached a peak of $4,198.50 per ounce before the yellow metal headed into the weekend at $4,165 per ounce. At the start of the week, with oil prices still high, yields at times rising again and a firmer US dollar, the noblest of metals came under pressure once more. It dropped to $4,106 per ounce yesterday morning before recovering to $4,140 per ounce. After media reports pointing to a potential renewed escalation in the Middle East, oil prices rose noticeably, while gold depreciated toward $4,070 per ounce. At 9:30 a.m. this morning, gold is trading at $4,090 per ounce.
Xetra-Gold: tracking the gold price
The Xetra-Gold price mostly moved nearly in parallel with the gold price in US dollars. During regular trading hours, it rose from €118.40 per gram last Thursday morning to around €120.20 per gram at the start of the week on Monday. It then declined to €117.70 per gram at the start of trading on Wednesday, before prices quickly turned upward again and climbed to €118.60 per gram yesterday afternoon. Following the renewed rise in oil prices, however, Xetra-Gold is currently trading somewhat lower at €117.00 per gram.
Central banks move into focus
Alongside geopolitical developments, the focus is likely to turn back to the central banks, which will convene for a large number of meetings over the next two weeks. The Fed meeting next Wednesday evening in particular is likely to be the highlight of the coming week, before the ECB follows on Thursday.
I wish all readers a restful weekend.