Gold comes under pressure

Market report Michael Blumenroth – 19.10.2017

Weekly market report

This week’s commentary is again a day early – please note that there will be no report next week, but I will back on time for the International Precious Metals & Commodities Show in Munich the following week.

While the German Indian Summer has truly been golden, the most precious of metals has lost some of its sheen this past week. 

This was due, in part, to the fact that the demand for safe havens is low as US and German equity indices have been hitting new record highs. One could, however, argue that this would be an excellent time to invest in gold in order to partially hedge stock market profits. Still, it has been the stock markets which were at the centre of investors’ attention this week.

The US dollar was able to rise against a number of gold producing countries’ currencies, and since Tuesday evening, both the US and European government bond returns have been on the rise. All of these factors have caused the gold price to suffer. In the commodities sector, the week kicked off with a focus on palladium, which rose above the 1,000 US$/ounce mark for the first time in 16 years, and copper, which hit a three-year high and rose above 7,000 US$/ton.

Still, gold in US dollars initially rose. While it traded at 1,293 US$/ounce last Thursday, the precious metal had climbed to 1,306 US$/ounce until Monday afternoon. Since then, it has steadily dropped to last night’s price of 1,276.50 US$/ounce. This morning (Thursday), it stood at 1,281 US$/ounce.
In euro, the gold price also dropped. From 35.10 €/gram last Thursday, Xetra-Gold initially rose alongside the rising gold prices and a slightly weakening euro, to 35.60 €/gram on Monday. During the course of the week, in particular from Monday to Tuesday, it dropped, hitting this week’s low last night at 34.80 €/gram. It currently trades slightly higher at 34.85 €/gram.

As for the next two week’s news: on Thursday, 26 October, all eyes will be on Mario Draghi, who is set to announce the 2018 course for the ECB’s bond buying programme. And the US President Trump is expected to finally announce Janet Yellen’s successor as Fed chair sometime before 3 November.  
Thank you to all of our readers and have a great week, I hope you will join us for the next market commentary coming up two weeks from now.

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