Once again, modest gains in sluggish trading

Market report Michael Blumenroth – 22.12.2017

Weekly market report

The week before Christmas has been unspectacular as far as the gold price is concerned. Continuing last week’s trend, investors did see slight gains, which is contrary to the years prior, when gold displayed a habit of slacking in the run-up to the holidays. 

Faster than I would have expected, President Trump’s “giant, beautiful, massive” tax reform has passed Congress. Will US key interest rates rise faster than expected as a result? The bond markets seem to anticipate exactly that. Returns, especially in ten-year bonds, showed a clear upward trend. The 2.5 per cent rise in the US constituted a nine-month high. In Germany, the UK and France, long-term bond returns also clearly reflected the trend. 

This phenomenon usually has an adverse effect on the gold price (even though it more closely tracks short maturities). This week, however, the precious metal remained obliviously strong. Trading at 1,257 US$/ounce last Friday, it slowly but steadily thrived in an extremely calm trading environment. The weekly high thus far was reached yesterday at 1,269 US$/ounce, and it remains close at its current price of 1,268 US$/ounce. 

The gold price showed a similar development in euro. From 34.30 €/gram last Friday, Xetra-Gold rose to 34.45 €/gram on Tuesday and currently trades at 34.40 €/gram. 

Next week, market movement will likely be dominated by year-end dispositions (keyword ‘window dressing’). 

As markets in Japan and the US will be open for trading on Tuesday, you’ll find a short report of the week here next Friday. I wish all our readers relaxing and enjoyable holidays, and a Happy New Year to those of you heading off on vacation.  

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