Summer sale

More mature and experienced readers may remember summer sales that may have entailed battles at the bargain table. While this type of sale has long since disappeared from the retail space, it seems that the end of meteorological summer brought a few bargain hunters to the gold market.

However, the gold prices rose significantly over the course of the week and touched the mark of 3,400 US$ per ounce due to these fundamental reasons:

• Gold prices were boosted by the speech of Fed Governor Powell in Jackson Hole last Friday. He indicated that risks, particularly in the US labour market, had recently increased, and that the Fed would possibly cut interest rates in September. Following the speech, yields on short-term US government bonds weakened, as did the US dollar, because the markets are now factoring in an interest rate cut as all but certain.

• France faces another vote of no confidence in Prime Minister Bayrou on 8 September, which could collapse the government or force new elections and in turn further delay the introduction of austerity measures to reduce France’s high national debt.

• US President Trump dismissed Fed Governor Lisa Cook on Tuesday night. Although it remains unclear and will likely entail court proceedings to clarify whether the dismissal is even legal, the move once again raised concerns on the markets about increasing political influence on the Fed’s monetary policy decisions, particularly because US government representatives are calling for sharp interest rate cuts despite inflation rates remaining above target.

Gold was initially more appealing to investors due to dropping yields and the temporarily weaker US dollar. The most recent political developments point to increased purchases based on safe haven considerations.

Gold prices rise slightly

The gold price initially dropped from 3,340 US$ per ounce last Thursday morning to a weekly low of 3,322 on Friday afternoon before Powell’s speech. Following said speech, gold jumped to just under 3,380. After a brief setback to 3,352 on Tuesday night, it recovered yesterday afternoon to 3,399 and kicked off today’s trading at around 3,390 US$ per ounce.

The Xetra-Gold price moved relatively in parallel with the US dollar price, although the strong euro initially slowed it down somewhat last Friday. From 92.15 € per gram on Thursday morning, it dropped to around 91.80 intraday and reached 93.95 yesterday afternoon despite brief setbacks. Xetra-Gold was expected to kick off today’s trading at around 93.65 € per gram this morning.

Tomorrow (Friday), the markets will pay close attention to the publication of the US core PCE rate for July, which is expected to have risen to an 18-month high. After Monday’s US Labour Day holiday, we will be kept busy with a wealth of US data in the coming week.