Consolidation

Easter holidays, the financial markets appear to have entered a phase of consolidation, somewhat exhausted. While trade disputes, particularly between the US and China, remain at the center of attention, no further reliable news has come to light regarding a possible escalation or de-escalation. The markets are meanwhile lying low.

The US has, however, signaled that the triple-digit tariffs imposed by the US and China on each other are unlikely to remain set in stone forever – a signal which fostered a certain degree of risk-taking across markets. The stock markets recovered, as did US government bonds. The US dollar also gained traction over its three-year low on Easter Monday, all of which tipped the gold prices slightly downward, but did not cause a dramatic slump.

Gold in US dollars stable above 3,300 US$ per ounce

Last Thursday morning, gold traded at 3,325 US$ per ounce, climbing to 3,370 overnight but slumping on Friday afternoon to 3,265, its lowest level in recent days. This was probably due to profit-taking ahead of the weekend and the slightly more risk-friendly mood across markets which weakened demand for safe havens. On Monday, gold recovered to 3,353 US$ per ounce and kicked off European trading today at a slightly lower 3,312.

Xetra-Gold: slight recovery

The Xetra-Gold price initially rose from 94.35 € per gram last Thursday morning to 94.65 intraday. It dropped to 92.50 at the end of the week on Friday but has since recovered. If the 7:00 a.m. level holds until the markets open, Xetra-Gold will start European trading at around 93.65 € per gram.

Markets: focus on US labor market and tariffs

The markets will be closely watching for US labor market data, due to be released on Friday. If these figures turn out weak, further interest rate cuts by the Fed become more probable, as indicated by several Fed governors at the end of last week. However, if they are stronger than expected, they are likely to give the US dollar a boost and gold prices could experience some headwinds as a result. Nevertheless, it is still advisable to closely follow reports on US tariff policy.

I wish all readers a happy May Day and possibly even a long weekend.