Black Friday bargains?

Thanksgiving yesterday and today’s shorter Wall Street trading hours made for a sluggish week across financial markets. US economic data provided light and shade, with particularly weak PMI data, regarded as quite valid early indicators for the development of industrial and service companies in the following months. In both the US and Eurozone, they range below the threshold of 50 points, thus pointing to a contraction of the economy.

Fed: smaller interest rate hikes ahead

The markets paid special attention to the minutes of the most recent Fed meeting, once again confirming that the interest rate hike announced at the December meeting will almost certainly be 0.50 percentage points, i.e. lower than the previous four meetings’ 0.75 percentage points. While that, in itself, is nothing new, the markets like to hear it on repeat. Capital market interest rates dropped both the US and the Eurozone, and the US dollar weakened.

Commodity markets are worried about the record number of new Covid-19 cases in China, and the lockdown measures they might entail. Oil prices suffered especially, and prices of industrial and precious metals also dwindled.

Gold prices down week-on-week

While gold traded at 1,763 US$ per ounce on Friday last week, it came under pressure early this week and had gone down to 1,729 by Wednesday. After recovering to 1,761 early today, it has again slackened over the past few hours and was trading around 1,755 at 8:00.

The Xetra-Gold price also weakened somewhat due to this week’s firmer euro, from 54.70 € per gram last Friday morning to 53.95 early yesterday. Today, Xetra-Gold was expected to start trading at around 54.15.

Markets keep keen eye on central banks

In the coming week, month-end dispositions and the return of many US traders from a long Thanksgiving weekend could spark volatility. Markets are likely to focus on the many central bank meetings scheduled in mid-December. Fed Governor Powell’s speech next Wednesday is also eagerly anticipated. 

I wish all readers a pleasant Advent weekend.