Following setback, gold price rebounds

Market report Michael Blumenroth – 02.11.2018

Weekly market report

Today marks the close of a somewhat exciting week during which the mood changed significantly. Initially, there were further significant price losses on the global stock markets. Prices continued to fall, particularly in the US and China, but also in Europe. The mood turned upon publication of a number of strong quarterly reports from major US companies. Bargain hunters were a likely contributing factor. Since Tuesday morning, the stock markets have seen significant price hikes, spurred on since yesterday afternoon by signals of an easing in the trade conflict between the US and China both from the US President and his Chinese counterpart.

Precious metals yield impressive gains

This resulted in impressively rising prices on the Asian stock markets and significant gains for commodity currencies, as well as losses of the US dollar against almost all major currencies (with the exception of the yen). Yesterday, precious metals rose in US dollars, with copper rising impressively by more than three per cent. The gold price kept up nicely and at its high saw a daily gain of just under one and a half per cent.

Gold in US dollar rises

In US dollar terms, gold traded at $1,232/ounce on Friday morning last week and rose to a weekly high of $1,243/ounce on Friday afternoon as a result of turbulence on the stock markets and the subsequent retreat into safe havens. With the stronger US dollar and the weakness of the commodity currencies, particularly at the beginning of the week, the price of gold then retreated quite steadily to $1,212/ounce on Wednesday afternoon. The recovery on the stock markets also played a role in this development. With the burgeoning weakness of the US dollar, however, gold was able to gain significant traction and climbed to $ 1,237/ounce yesterday afternoon. It has since firmly held its ground and currently trades at 1,235 $/ounce.

Xetra-Gold linked to unsteady euro

The euro initially continued on its course of last week, depreciating against the US dollar, but has been gaining strength since yesterday. From 34.85 €/gram last Friday morning, the price of Xetra-Gold thus rose to its weekly high of 35.15 €/gram on the same day. It retracted to 34.42 €/gram on Wednesday, but amid a general recovery of metal prices, it rebounded to 34.80 €/gram yesterday and opened at 34.75 €/gram this morning.

Focus remains on US

The US labour market data is on today’s agenda. Next week, investors are likely to focus on the US Congressional elections on Tuesday and a Fed meeting on Wednesday, which is, however, not expected to provide any stimulus.

I wish all readers a relaxing and sunny November weekend.

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