Consolidation week

Following the past two weeks’ turbulence, market participants have displayed a regained appetite for risk this week, also marked by rising yields, a recovery across stock markets and – spoiler alert – the initial selling of safe havens.

Previously, we had seen another exceedingly turbulent and nervous trading day last Friday. Financial players in particular came under pressure, resulting in a drop in bond yields and a significant decline for stocks. After trading on European stock markets (some might say “finally”) closed, we saw an initial recovery for US stock markets. The weekend passed without bad news, prompting market participants to go from risk-averse trading to greater risk appetite.

Markets recover

The German benchmark index DAX, for example, had gained 3.78 per cent since the close of trading last Friday until yesterday evening, and a number of other European indices performed even better. Yields on two-year Bunds climbed 0.35 percentage points over the same period. On the interest rate futures markets, interest rate cuts by the US Federal Reserve of “only” 0.57 percentage points for the second half of 2023 were priced in last night, compared to 1.10 percentage points last Friday. Positions in supposedly “safe currency havens” such as yen and Swiss francs were reduced.

Gold prices ease slightly

In this environment, gold prices held up remarkably well. From 1,990 US$ per ounce last Friday morning, gold had jumped to around 2,003 by the afternoon. Due to the easing on the financial markets, it slumped to 1,944 on Monday. However, despite the above-mentioned headwinds, the precious metal had recovered to 1,984 by yesterday afternoon. This morning, it traded at around 1,980 at 8:00, representing a rise of 8.5 per cent since the beginning of the year.

The Xetra-Gold price also dropped slightly week on week, with the stronger euro against the US dollar leaving its mark. Early last Friday, it traded at 59.00 € per gram, reaching the day’s high at 59.95. It declined to 58.00 on Monday and hit its weekly low yesterday at 57.85. This morning, Xetra-Gold was expected to start trading at a slightly higher 58.40.

Today marks the end of the quarter. Among the quarterly data to be published next week, a highlight should be that of the US labour market on Good Friday. 

I wish all readers a great weekend.