Gold regains upward momentum

Gold prices have once again been buoyed by developments in US trade policy and economic data, which also had an impact on yields and the US dollar exchange rate.

In terms of US tariff policy, it seems that Fridays call for particular vigilance: A week earlier, US President Trump had spooked the markets on a Friday afternoon via his social media channel by threatening to impose 50 per cent import tariffs on goods from the EU from the beginning of June (and then withdrawing this threat the following Monday). This time, he complained about slow progress in trade talks with China. He accused those responsible in China of not adhering to the agreements reached at the meeting in Geneva, where both countries had moved towards a – at least temporary – de-escalation of the trade conflict.

US dollar under pressure, safe havens in demand

On Friday evening, Trump announced that US import tariffs on aluminum and steel would be doubled from 25 to 50 per cent as of yesterday, Wednesday, which has indeed come into force. As this announcement was made after the close of trading in New York, the markets did not have time to react until Monday. They did so in a similar manner to April, with the US dollar coming under pressure and the safe havens of gold, the Swiss franc and the yen seeing increased demand. Yesterday, US economic data disappointed, pointing to weakness in the US service industry and signs of a slowdown in the labor market. This weakened the US dollar, which had been recovering slightly at that point.

Gold price up week on week

Last Tuesday evening, the gold price stood at 3,290 US$ per ounce. After falling back to 3,245 on Thursday night, it ended the week at exactly 3,290. Following developments in the tariff dispute (see above), the gold price rose by around 100 US$ per ounce on Monday and Tuesday night, reaching a weekly high of 3,392 US$ per ounce. Although prices fell back to the symbolic figure of 3,333 on Tuesday, weak US data yesterday pushed gold back up to 3,385. The precious metal kicked off today’s trading at around 3,365 US$ per ounce.

The Xetra-Gold price also rose week on week. Initially down from 93.50 € per gram last Tuesday evening to 92.85 on Friday afternoon, it started the new week at 94.40 and climbed to 95.20 in the afternoon. If the 8:00 price holds firm until the start of trading, Xetra-Gold is likely to trade at 94.85 € per gram.

Tomorrow (Friday) the focus will likely be on US labor market data, followed by US consumer price data, due for release next week.

I wish all readers a pleasant and enjoyable Whitsun weekend.