Out of the spotlight

In terms of precious metals, market participants have recently been focusing more intently on silver than on gold. Due to a noticeable supply deficit expected by many analysts and a continuing shortage of physically available silver in New York, London, and parts of Asia, prices for the white metal have jumped from record high to record high and nearly doubled since the beginning of the year. Similarly, copper traded at an all-time high yesterday with expectations of a supply deficit also playing a major role.

Market participants expect Fed interest rate cut

As a result, traders shifted their focus somewhat towards these metals, especially since recently published US economic data did not provide any significant new impetus to the financial markets. Data published by private service provider ADP suggests that the US labor market, more specifically private companies, are continuing their downward trajectory. At the same time, leading indicators point to continued price pressure, presenting a somewhat unpleasant situation for the Fed meeting and decision making on Wednesday. Investors expect the Fed to give priority to the labor market and firmly factor in a further key interest rate cut of 0.25 percentage points.
While a slightly weaker US dollar over the course of the week supported gold prices, the recent rise in government bond yields has once again put a damper on the market.

Gold in US dollars at weekly high of 4,262 US$ per ounce

While gold traded at 4,160 US$ per ounce last Thursday morning, the precious metal was in demand on Friday and at the beginning of the week, especially as the stock markets struggled at the start of December on Monday. As a sought-after safe haven, gold reached the week’s high on Monday afternoon at around 4,262 US$ per ounce. On Tuesday, prices dropped by around 100 US$ per ounce from this high and have since been trading near the 4,200 US$ mark. This morning, the gold price in US dollars dropped slightly, to 4,190 US$ per ounce.

Xetra-Gold remains true to 116 € per gram mark throughout the week

The Xetra-Gold price moved along the same lines, as the euro-US dollar exchange rate also remained largely unchanged. From 115.45 € per gram last Thursday morning, Xetra-Gold rose to 117.90 on Monday morning and weakened slightly over the course of the week to 115.50 but mostly remained in the vicinity of 116. Xetra-Gold is expected to start trading slightly lower this morning, at around 115.60 € per gram.

Friday will see the publication of US inflation data, albeit for September. And while it is thus somewhat outdated, it might bear market-moving potential, nevertheless. The focus will likely be on next Wednesday’s Fed meeting and the fundamental question of monetary policy for the coming months.

I wish all readers a pleasant and relaxing second Advent weekend.