Gold surges to record highs

The past days have been spectacular for fans of the yellow metal. Rising like a phoenix from the ashes last Friday, gold resumed its upward momentum on Monday and, to a lesser extent, over the following days.

The exciting thing about the movement is that there was actually no entirely convincing, fundamental reason for the remarkable gold price development last Friday afternoon – except perhaps to give the author of these lines a scoring opportunity for the gold talk on Saturday at the Börsentag in Frankfurt.

My personal guess is that various reasons joined forces:

• First, major US investors were underinvested, as they tended to bet on prices falling further and had significantly reduced their buying positions on the US futures exchanges since the beginning of the year. Many of these investors follow trends as they emerge. With gold prices having shown strong upward pressure in recent days, these investors are returning to the market to purchase.
• Gold prices also received a tailwind from weaker-than-expected US manufacturing and consumer data, which was published last Friday. As a result, yields on US government bonds dropped, making gold, as an asset which pays neither interest nor dividends, more attractive as an investment. Fed governor Jerome Powell emphasized only yesterday that he expects to be able to cut interest rates this year, although this is not likely to happen until June, at the earliest.
• Data shows demand for physical gold has been exceedingly high across China and India since the beginning of the year. Central banks are also continuing to act as buyers.

Will the rally continue?

The mostly price-sensitive demand from Asia could now decline somewhat at the higher price level. It will be interesting to see to what extent short-term, speculative investors will continue to enter the gold market or whether they will soon take profits. In any case, it never gets boring...

Last Thursday morning, the precious metal traded at 2,036 US$ per ounce. Following the above-mentioned disappointing US economic data, the gold price jumped to 2,086 on Friday afternoon. It has since gained day by day until reaching a new record high of 2,141 on Tuesday, which was easily surpassed again this morning at 2,161.50. European trading opened today, Thursday, at US$ 2,156 per ounce.

Xetra-Gold at a new all-time high

The Xetra-Gold price also enthusiastically participated in the record race. From 60.40 € per gram last Thursday, it rose to a new all-time high of 63.45 on Tuesday afternoon, and then weakened slightly due to the firmer euro. This morning, it is expected to kick off the trading day at a new all-time high of around 63.55 it is still trading at the current level in an hour’s time. 
Today, the focus is on the ECB meeting, which market players are hoping will bring clues for a possible date of an interest rate turnaround. Tomorrow’s schedule includes US labour market data, which could also cause market movement. The question of whether there will be any profit-taking before the weekend will remain crucial for gold prices.

I wish all readers a pleasant, sunny, golden early spring weekend.