Gold prices quite stable

Although the past week’s events in Ukraine are making a look at the markets seem secondary, they are also casting long shadows there, with a focus on the extreme price jumps in energy commodities. Hitting above 118 and 115 US$ per barrel, respectively, Brent and WTI oil were traded at their highest prices since 2008. Yesterday, the natural gas contract on the Dutch Title Transfer Facility (TTF) was traded at exactly 199.99 € per megawatt hour (MWh), its highest ever – a year ago, natural gas traded at 15 € per MWh.

Volatile energy commodities weigh on markets

It is European countries which are most heavily hit by the enormous price fluctuations and jumps in energy commodities (the US is now an oil exporter), reflected in both the European stock indices and the euro. They saw considerable losses over the course of the week. Government bond yields also dropped from their recent highs.

What about Russian gold reserves?

On the one hand, the gold price benefited from rising risk aversion and lower capital market interest rates. On the other hand, the strong US dollar weighed on prices. One question currently discussed on the markets: to what extent could parts of the gold reserves of the Russian central bank, estimated at US$132 billion, be sold? It would be a scenario likely to place the gold prices under pressure – but since the reserves are supposedly stored within Russia itself, a sale would hardly be possible in the short term. The topic is therefore currently not relevant to the markets. And compared to other commodities, gold saw only moderate volatility this week. 

Gold in US Dollar and Euro gain slightly

Gold traded at 1,915 US$ per ounce last Friday morning. On Friday afternoon, the markets’ risk appetite gained traction, weighing down the precious metal to its weekly low at 1,883. In light of increasing escalation of the armed conflict in Ukraine, the gold price rose to 1,950 on Wednesday evening; due to capital market interest rates rising again on Thursday and the strength of the US dollar, it repositioned at 1,935. Following reports of a fire in a Ukrainian nuclear power plant as a result of Russian attacks, gold briefly jumped to 1,951 last night. This morning, it traded at 1,937.

The price of Xetra-Gold also rose week-on-week within regular trading. From 55.00 € per gram at the end of last week and 53.85 on Friday afternoon, it rose to 56.50 on Thursday morning. At the start of trading today, Xetra-Gold is likely to trade slightly higher, at around 56.60.

With the geopolitical situation dominating market movement, today’s US labour market data will most likely be perceived as a side note.  

I wish all readers a peaceful weekend.