Jumps in yields continue to hamper gold prices

Market report Michael Blumenroth – 10.06.2022

Weekly Market Report

This week, market participants had two highlights marked on their calendars: yesterday’s ECB meeting and US inflation data, published today. As expected for the ECB meeting, the Monetary Policy Council decided to end bond purchases on 1 July and announced its plan to raise its three key rates by 0.25 percentage points each at the next meeting on 21 July. The ECB also announced a larger increase in September should the medium-term inflation outlook remain unchanged or worsen, which is in line with market expectations of a 0.5 percentage point rate hike in September. It also announced “gradual” rate hikes for the fourth-quarter meetings and probably in early 2023, as it now expects inflation to reach 6.8 per cent in 2022 and 3.5 per cent in 2023. The latter significantly surpasses analysts’ previous expectations.

Euro loses against US dollar

With the interest rate turnaround now effectively in place, yields on government bonds of eurozone countries rose considerably. Ten-year Bunds yielded 1.46 per cent, the highest level since 2014, and the yields of their Italian counterparts even climbed to 3.6 per cent. The widening gap between the yields of Bunds and those of Italy, along with general economic concerns, may have been responsible for the euro’s slide against the US dollar and most other G10 currencies, despite the prospect of interest rate hikes. In addition, the US dollar is once again sought as a safe haven, as stocks fell sharply on Thursday.

Gold prices slightly weaker week on week

For the gold price, it was an overall rather detrimental atmosphere, causing moderate losses over the course of the week. The precious metal traded at 1,869 US$ per ounce on Friday morning last week. US labour market data turned out more robust that expected and thus kept market participants’ fears in check – fears of a Fed that would continue to vigorously fight inflation by continuing to raise interest rates. As a result, gold prices weakened, from Friday afternoon to Tuesday night, to a weekly low of 1,837 US$ per ounce. With a temporarily weaker US dollar, gold recovered to 1,860, a short-lived respite. At 8:00 this morning, gold traded at 1,845.

The Xetra-Gold price also weakened slightly over the course of the week. Still trading at 55.90 € per gram on Friday, it dropped to its weekly low yesterday afternoon of 55.20 after the euro initially rose significantly against the US dollar immediately after the ECB meeting. The weakening euro then caused Xetra-Gold to rise to around 58.65. This morning (as of 8:00), it was expected to start trading at a slightly more robust 55.90.

US inflation data is eagerly awaited this afternoon at 14:30 and could cause further market movements. In the coming week, the focus will be on central bank meetings in the UK, Switzerland, and Japan, among others.

I wish all readers a sunny weekend.

Upcoming Events

Events

16.07.2022 - 16.07.2022 Börsentag Munich 2022

Private investors

Youtube channel

Production of Umicore precious metal bars

Production of Umicore precious metal bars

Opening Bell Event zum 10-jährigen Bestehen von Xetra-Gold (German)

Opening Bell Event zum 10-jährigen Bestehen von Xetra-Gold (German)

Gold als eigene Anlageklasse: Interview mit Steffen Orben (German)

Gold als eigene Anlageklasse: Interview mit Steffen Orben (German)

Please select the optional cookies to activate Youtube.

Newsletter

Are you interested in receiving regular information on Xetra-Gold? Then subscribe to our monthly, free-of-charge newsletter to learn more about our gold holdings, upcoming events and to read our gold market outlook.

Xetra-Gold Newsletter

We are sorry that you consider to unregister from our newsletter. Are you missing out information? If yes, we are pleased to receive your feedback. Of course, you can always re-register at any later point of time.

Xetra-Gold Newsletter

Xetra-Gold Hotline

Xetra-Gold-Hotline

Do you have questions? We have the answers. Contact us here: 9 a.m.–6 p.m. CET

+49-(0) 69-2 11-1 16 70

xetra-gold@deutsche-boerse.com

For press inquiries:media-relations@deutsche-boerse.com

To contact form