Trading amid supposed summer slump

Today’s headline may not be entirely accurate, as a real summer slump is failing to materialize this year. After all, tariffs, geopolitics and US government statements are keeping us on our toes, even on the hottest days of the year.

However, at least as far as economic data is concerned, the week has not provided us with much food for thought for new market ideas. The data highlight of the week was the July US consumer price data published on Tuesday, which failed to provide a clear message. Interpretation was up for grabs, depending on individual preferences.

Contrary to expectations, US inflationary pressure did not increase in July, but core inflation, adjusted for energy and food prices, rose more strongly than expected. As in June, consumer prices were 2.7 per cent above the level of the same month last year. The core rate, on the other hand, rose by 3.1 per cent, compared to 2.9 per cent in June. The financial markets decided to view the glass as half full; at least the overall rate had not risen further. A key interest rate cut by the Fed at its September meeting is currently factored in with a probability of 100 per cent. US government bond yields and the US dollar were down, which had a supportive effect on gold prices.

US speculation about labor market data and key interest rates

The US dollar faced further headwinds from the recent resurgence of concerns about the independence of US institutions.

The designated head of the Bureau of Labor Statistics (BLS), E.J. Antoni, had raised the idea of publishing labor market statistics quarterly instead of monthly. The financial markets, which rely heavily on monthly data, were heavily opposed to the suggestion.

In addition, US President Trump continues to increase pressure on Fed Chairman Powell, and US Treasury Secretary Bessent came to Trump’s aid yesterday, calling on the Fed to cut interest rates by 0.5 percentage points in September. In his view, it should be lowered even further, by 1.5 to 1.75 percentage points.

Confusion over US tariffs: Gold in US dollars at record high

I would also like to mention an event from last Friday: With a jump to 3,534 US$ per ounce for the December contract on the Comex futures exchange in New York, gold traded at a record high on Friday night.

This put the price at a record-breaking 125 US$ per ounce above the London spot price for gold for immediate delivery – the reference price of this market report. The reason: according to a British financial newspaper, one-kilogram and 100-ounce gold bars – which are deliverable against contracts traded on Comex – were classified as ‘semi-processed’ rather than ‘unprocessed’ in a decision by the US Customs and Border Protection on 31 July. This would make them subject to customs duties. However, the US administration backpedaled and clarified on Friday evening that it would look into the matter. On Monday, Trump clarified that no tariffs would be imposed on gold imports.

Week on week gold prices  

The tariff uncertainty pushed the gold price to its weekly high. Last Thursday morning, the precious metal traded at 3,375 US$ per ounce and jumped to around 3,409 at the start of trading on Friday. However, once it was clear that no tariffs would be imposed on US gold imports, gold prices slackened.

The rally in US stock indices, including new record highs for the S&P 500 and the Nasdaq Composite, which does not exactly imply an acute need for safe havens, did nothing to support the gold price, which dropped to 3,331 US$ per ounce on Tuesday before US inflation data caused its rise to 3,370 yesterday. The precious metal kicked off today’s trading at around 3,360 US$ per ounce.

Xetra-Gold with slight weekly loss

The Xetra-Gold price suffered somewhat from the robust rise of the euro against the US dollar. It initially rose from 93.00 € per gram on Thursday morning to 94.00 on Friday as a result of the gold tariff debate but dropped to 91.90 on Tuesday, followed by a recovery to 92.60 yesterday afternoon. If this morning’s 8:00 price holds fast, Xetra-Gold is expected to start today’s trading at around 92.30 € per gram.

In addition to geopolitics, i.e. tomorrow’s meeting of Trump and Putin in Alaska, the focus remains on data that could signal a need for action on monetary policy by the US Federal Reserve. The markets will be closely monitoring today’s US producer price index and tomorrow’s US retail sales data. Decisive data may, however, not be available until the US labor market report in early September.

I wish all readers a happy summer weekend.