Gold and euro in narrow range throughout the week

Market report Michael Blumenroth – 23.05.2019

Weekly market report

This week’s market report once again comes a day early. The dominant topic across the markets continues to be the trade conflict between the US and China. This news situation is causing the stock markets to move back and forth: at the beginning of the week, the leading US indices saw significant losses after the Chinese company Huawei was cut off from US chip manufacturers’ supplies.

Stocks and metals see losses

The stock markets’ volatility came as a surprise. Cyclically sensitive metals such as platinum, palladium, copper and the other base metals, as well as the oil price, declined sharply in expectation of a slightly weakening global economy. Yields/market interest rates on US treasuries and German government bonds also followed the downward trend. However, gold and silver remained as unimpressed by the movements in other markets as the Euro/US dollar exchange rate, which has lingered around the 1.1150 €/US$ mark for almost the entire week.

The development of the gold price appears torn between the trade conflict and the fragile situation in the Middle East, which make safe harbours seem necessary. On the other hand, the market still expects the US and China to ultimately come to an agreement, and the stock market setbacks do not yet appear to be leaving a lasting impression. Nevertheless, the topic will certainly remain in the focus of market observers throughout the coming weeks.

Gold in search of clear direction

Gold traded at 1,288 US$/ounce on Friday morning last week. The gold price often sees gains near the end of the week; last Friday afternoon however, amid expectations of the trade conflict easing, it dropped to 1,275 $/ounce. From Monday until Thursday morning, gold prices have remained in an almost alarmingly narrow range between 1,279 $/ounce (the week’s high on Monday) and 1,270 $/ounce (the weekly low on Tuesday). Generally speaking, it has remained firmly anchored around the 1,275 $/ounce mark, which is where it currently dwells.

Xetra-Gold also recorded slight losses over the course of the week. From 37.05 €/gram last Friday morning, it declined to the previous week’s low of 36.62 €/gram on Tuesday and currently trades at around 36.75 €/gram.

Monday is a public holiday in both the US and UK. The European elections and the latest Brexit developments are likely to be the focus of attention at the beginning of next week.

I wish all readers a relaxing, sunny weekend.

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