Gold breaks through 1,200 US$/ounce mark

Market report Michael Blumenroth – 13.01.2017

Weekly market report

It has been a successful week for gold investors, with gold overtaking last week’s top performers platinum and palladium.

Last Friday morning, gold had traded at 1.175 US$/ounce and had closed the year 2016 at a mere 1,151 US$/ounce. Since then, the precious metal has climbed steadily upwards, reaching its weekly high of 1,207 US$/ounce yesterday afternoon. During the course of the evening and night, it slackened slightly and currently stands at 1,194 US$/ounce.

The reasons for the rise in the gold price are similar to last week; the US dollar somewhat depreciated, again due to the US government bond returns’ easing. Their steep rise since the US presidential elections thus seems to have come to a halt, at least for the time being. The most important event for the markets should have been the press conference of president elect Trump on Wednesday afternoon, the first since his surprising victory. Market participants were in high hopes of receiving information on the future fiscal policy of the US, news on the national debt and investments as well as the tedious issue of border tax. But Donald Trump remained true to himself in abstaining from any definite statement on these matters of interest and instead focused on entirely different subjects. All those who had been anticipating a sequel to the trends of November and December and a stronger US dollar alongside rising bond returns were disappointed and consequently took precious metals to their current heights.

Let us all note that the movement of US government bond returns currently seems to be the most influential factor in the development of gold. When they drop, the gold price rises and vice versa.
Investors in the euro zone also saw a strengthening of gold – only slightly slowed down by the rise of the euro against the US dollar by approximately a half cent.  From 35.70 €/gram exactly a week ago and 35.30 at the end of 2016, the price of Xetra-Gold climbed to its weekly high of 36.50 €/gram on Thursday afternoon and currently trades at 36.15 €/gram.

Before the trading week closes today, we await the publication of US retail sales data for December, which can have a significant impact on the markets. The US is celebrating Martin Luther King Day on Monday and markets remain closed. Things will most likely heat up towards the end of the week, which is when Donald Trump will be sworn into office as the next US president. What the future holds for US economic policy is anybody’s guess.

I wish all our readers a happy weekend unaffected by the stormy weather. 

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