Trump ante Portas

Market report Michael Blumenroth – 20.01.2017

Weekly market report

The week has been marked by anticipation of what is to come following the inauguration of the new US president and whether the desired effects on the US economy will actually set in.

After a calm Monday (Martin Luther King Day in the US), Tuesday’s Brexit speech by the British Prime Minister Theresa May caused some upheaval. Already expecting the worst prior to her statements, investors had sought out safe havens. 

Gold therefore reached its weekly high. Traded around 1,194 US$/ounce last Friday morning and as low as 1,188 US$/ounce in the afternoon, it had climbed up to 1,218.50 US$/ounce by the time May stepped in front of the microphones. Due to the fact that the speech turned out somewhat more conciliatory than market participants had expected, the gold price slackened slightly later that day and further dropped during the course of the week in the face of once again rising US government bond returns and the entailing strengthening of the US dollar, reaching 1,196.50 US$/ounce yesterday afternoon. At the same time, ECB president Draghi remained extremely reserved on the issue of inflation in the euro zone, causing the euro to drop to its weekly low against the US dollar. The following recovery of the euro and a general slackening of the US dollar caused gold to recover to its current 1,207 US$/ounce, a weekly gain of just over one per cent.

Investors in the euro zone also a saw slight increase in the value of the precious metal: from 36.15 €/gram exactly a week ago and 36 €/gram last Friday afternoon, the price of Xetra-Gold climbed to a weekly high of 36.70 €/gram on Tuesday afternoon and currently trades at 36.35 €/gram. 

Today and throughout the next couple of days, the markets are likely to focus on the first decisions of Donald Trump and his administration. Customs duties? Tax relief? Infrastructure measures? And what are the effects on the US dollar and, as a consequence, on the commodities markets? If one thing is for sure, then that the upcoming days and weeks will be far from boring.

I wish all our readers a wonderful sunny weekend. 

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