Gold bobs up and down in anticipation of Trump’s decisions

Market report Michael Blumenroth – 02.11.2017

Weekly market report

The market report comes a day early, which is somewhat unfortunate, as the week’s most important decisions are set to be announced this afternoon and evening: the future of the US tax reform planned by the (male dominated) Trump administration as well as the name of the future Fed chair, most likely also male, as Jerome Powell currently seems to be the favoured candidate. He is already a member of the Fed board of governors and in the past has gone along with all of Janet Yellen’s decisions. This most likely means that he plans to continue her conservative course regarding base rate increases. Yesterday’s Fed meeting certainly was one of the most uneventful ever. An interest rate hike in December seems certain.

The US tax reform is expected across the markets, even if the details remain vague pending congressional passing. The potential for disappointment remains.

The action is in the stock markets, where US indices and DAX are chasing one record high after another and companies such as Amazon and Facebook have reported record earnings and revenues. The focus on commodities has weakened, but oil prices remain surprisingly strong.

Gold in US dollar has been largely immobile for the past two weeks. It traded at 1,281 US$/ounce a week ago and moved wave-like (two steps down, one up) downward to 1,264 US$/ounce last Friday. It has since rebounded in calm trading to 1,281.50 US$/ounce last night and traded at 1,276 US$/ounce this (Thursday) morning.

Gold investors in the euro zone benefited from the slightly weaker euro, especially following last week’s ECB meeting. From 34.85 €/gram last Thursday, Xetra-Gold rose to 35.40 €/gram yesterday and currently trades at 35.35 €/gram.

The next days will bring, amongst others, the above mentioned decisions from the Trump administration as well as the US president’s tour of Asia. The US domestic policy developments are also likely to remain interesting.

I wish all of our readers a pleasant weekend and hope you will return for next week’s gold market report.

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