Gold fails to reach new annual highs

Market report Michael Blumenroth – 29.03.2018

Weekly market report

Since our last report, gold failed to follow through on what appeared like a strong start. Initially, the prospects seemed good. Investors’ fears of an all-out trade war between the US and China caused stock prices to weaken and investors to turn to safe havens. The fact that the US government’s newest recruits have been hardliners caused a number of investors to take a cautious approach across the markets. The US dollar weakened as did returns/market interest of US treasuries. Coupled with rather weak long positions in gold across the derivatives markets, which indicate backlog demand, the gold price rose at first. When “old economy” indicators (stock indices) calmed down yesterday alongside a rising US dollar against almost all other currencies, the gold price however dropped.

Strong US dollar, slacking gold

Following its brief rise, the precious metal fell below last week’s level. It traded at $1,341/ounce last Friday morning and climbed to its weekly high of $1,357/ounce on Tuesday morning, especially due to the weak US dollar. What followed, however, was an almost continuous setback to $1,323/ounce yesterday evening due to the significantly stronger US dollar. The precious metal currently trades nearly unchanged at $1,326/ounce.

In euro, the gold price has seen a similar development and presently trades below last week’s level. From €34.95/gram last Friday morning and €35.15/gram that afternoon, Xetra-Gold dropped to €34.60/gram yesterday afternoon and currently trades at approximately the same level.

US key interest rate forecast remains focus

Market observers will play close attention to consumer price data from Germany and the US, to be published this afternoon, as well as the quarter-end disposition of market participants. Coming up next week, geopolitical issues such as the looming trade conflict as well as continuing speculation regarding the Fed’s future interest rate policy will be at the top of the agenda.

A very Happy Easter to all of our readers, and please note that in the US, Easter Monday is not a bank holiday.

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