Record chase on hold

This week, the gold price is just shy of again reaching a round number, not quite hitting 3,800 US$ per ounce. Still, the gold price rally entered a new round at the beginning of the week with astonishing momentum, the foundation of which has been likely laid by buyers of gold ETCs. The Fed resumed interest rate cuts last Wednesday and raised expectations of further cuts in the future, thus triggering the recent gold price surge. Last Friday, investors purchased around 861,000 ounces of gold ETCs, valued at roughly 3.2 billion US$, the strongest single-day purchases since January 2022.

Buying activity also drives silver and platinum prices

Net holdings of gold ETCs have risen by around 12.4 million ounces since the beginning of the year to 95.8 million ounces and investors continued their shopping spree into this week and across the precious metals markets, also driving silver (14-year high) and platinum (11-year high). Prices rose despite slightly higher yields and a somewhat stronger US dollar. Several investors who entered the market after believing to have identified a trend will have jumped on the bandwagon at the beginning of this week.

However, it may be wise to keep things in perspective: highly dynamic market movements often offer potential for correction when the first profit-taking occurs. With a price increase of more than 12 per cent within 25 trading days, there are indications that the first investors already cashed in their profits midweek.

Gold in US dollars with weekly gains

While gold prices still stood at 3,655 US$ per ounce last Thursday morning, they initially dropped back to 3,628 on the same day. After rising to 3,685 by the end of the week, gold prices reached one record high after another on Monday and Tuesday, until finally hitting a pause button at around 3,791 per ounce on Tuesday morning. Midday yesterday the gold price dropped to 3,730 and kicked off today’s trading at around 3,740 US$ per ounce.

Xetra-Gold trades above 100 € per gram

The Xetra-Gold price also shone with a new record high. From 99.60 € per gram last Thursday morning, it initially dropped to 99.15. However, with the rise in the US dollar price of gold, there was no stopping Xetra-Gold, which started its ascent at the beginning of the week. Due to the slightly weaker euro exchange rate against the US dollar, the climb to its new record high was slow but steady, hitting 103.35 € per gram yesterday. It closed trading at 102.65 and is expected to open this morning at around 102.40 € per gram, within sight of the record high.

Outlook: will profit-taking cause volatility?

In the medium term, many factors point to further upside potential for gold prices. However, with the end of the month approaching next week, we could also see profit-taking. In addition, many speculative market players are likely to have jumped on the bandwagon in recent days, which increases the potential for further profit-taking and volatility. The end of next week will see the release of new job market data.

I wish all readers a relaxing weekend as we ease into the fall season.