Holding out for Trump, tariffs and the Fed

For the gold price, the previous week seems to have hit the autorepeat button. It has remained stagnant since last Friday, firmly fixed around 1,318 $/ounce. The past days have been relatively calm across all markets, rising once from their lethargy upon Rex Tillerson’s firing, which compensated what it lacked in elegance through the fact that it occurred via twitter. His tempering influence now gone from the White House, potential sanctions against Iran might well move up on the agenda. The markets however returned to their placid state within a day.

Stoic gold price, stagnant market environment

Yesterday, the designated new chief economic adviser Kudlow caused the currency markets to show some enthusiasm following his statement that a good economic policy includes a “sound, strong dollar”.  Nevertheless, most markets saw little movement throughout the week. While gold traded at 1,318.50 $/ounce last Friday, it climbed to its weekly high of 1,330 $/ounce following the firing of Tillerson. The firmer US dollar caused the gold price to drop to 1,314 $/ounce last night. And, as mentioned above, the precious metal currently stands at 1,318.50 $/ounce. 

Against the euro, gold has remained similarly stoic. From 34.45 €/gram last Friday, the price of Xetra-Gold rose to 34.53 €/gram within a day. The weekly low thus far was reached on Tuesday at 34.28 €/gram, right after publication of the US consumer price index data and Tillerson’s firing. Xetra-Gold currently again trades at 34.45 €/gram. 

Key interest hike forecast to be raised under new Fed chair?  

The markets are now anticipating further news on the looming trade war. Next week will see the G20 meeting of finance ministers and central bank governors. On Wednesday evening, Jerome Powell will elaborate on the current views of the US central bank in his first press conference as the new chair. Will the Fed hold on to the three announced key interest rate increases or will the forecast increase to four? 

I wish all of our readers a happy weekend.