Subdued sentiment

Market report Michael Blumenroth – 27.06.2024

Weekly Market Report

As the first half-year is nearing its end, many markets still seem to be smoothing out positions, and all the more so as the coming week will be short due to the US Independence Day holiday. Towards the end of last week, however, metals – more specifically industrials such as copper and aluminium – once again faced strong headwinds.

On the back of disappointing Chinese industrial production data in May at the beginning of last week, the purchasing managers’ indices for industry in Germany and France, lead indicators of economic development over the next six months, also fell well short of expectations. A weaker-than-expected industrial development obviously weighs on demand for many metals, whose prices came under pressure at the end of the week.

US dollar at fresh 2024 high  

US purchasing managers’ index data published in the afternoon turned out better than forecast and had an equally unpleasant effect on demand for metals as the US dollar appreciated. The dollar remained extremely strong over the course of this week. Just yesterday, the Bloomberg US dollar index rose to its highest level since November 2023.

All of the above pas upped the pressure on gold prices in recent days. Last Thursday, the precious metal traded at 2,341 US$ per ounce and climbed to a weekly high of 2,368.50 by midday on Friday. As seen several times in recent weeks, what appeared to be profit-taking or position-smoothing occurred on Friday afternoon and evening and gold slipped to 2,320 US$ per ounce. It recovered to 2,337 on Tuesday before the strong US dollar touched down yesterday, causing a setback to 2,294. This morning at around 7:00, gold will start European trading at around 2,300 US$ per ounce.

Xetra-Gold drops below 70 € per gram

Xetra-Gold initially rose from 70.05 € per gram last Thursday morning to 71.25 on Friday but slumped to 70.00 on the same day, reaching a weekly low of 69.10 yesterday. This morning, Xetra-Gold is expected to start the day at around 69.15 € per gram.

Overall, gold has been trading in a well-defined range of almost exactly 100 US$ per ounce for nearly five weeks. Several data sets are scheduled for publication before the end of this week, the absolute highlight being the publication of the US core PCE rate, which serves as the Fed’s primary inflation measure. If it deviates significantly from expectations, noteworthy market movements shortly before the end of the first half of the year might ensue.

I wish all readers a relaxing and exciting football weekend.

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