Unsustainable weekly gains for gold

Market report Michael Blumenroth – 12.04.2019

Weekly market report

Most markets have seen another quiet week. Currency pairs such as the euro/US dollar or the euro against the Swiss franc are lingering near their monthly lows. Roughly speaking, this means that market movements were once again very manageable.

Neither have the weekly highlights been able to ensure sustained price movements. Brexit has yet again been postponed. The ECB meeting was only taken note of casually across the markets, with the euro weakening in the short term as Mario Draghi expressed scepticism regarding the economic outlook for the eurozone. The minutes of the last Fed meeting did not contain any surprises either.
Generally speaking, this indicates the spreading of a comfortable pre-Easter calm, although the fact that a number of market participants might be on holiday over Easter could also lead to stronger market movements.

Gold in US Dollars peaks, then retreats

Gold traded at 1,291 $/ounce on Thursday morning last week. On Thursday afternoon, it had already retreated to 1,281 $/ounce, which marked the week's low. The fact that central banks continue to act as net buyers of gold, that the quite massive sales of gold ETFs in the US the week before may have come to an end and many analysts (including our own bank's commodity analysts) have slightly raised their price targets for gold in 2019 all might have played a role in the fact that sentiment for gold was generally positive at the beginning of the week. On Monday, the gold price rose above the 1,300 $/ounce mark, and on Wednesday evening to the weekly high of 1,310.50 $/ounce. But it seems to have had little tolerance for the high altitudes. Yesterday, precious metals in general as well as a number of base metals came under pressure and lost a large part of their weekly gains. Gold reset to 1,290 $/ounce and currently trades at 1,293.50 $/ounce.

Since last Thursday, the euro has remained within a very manageable range against the US dollar, between 1.1206 €/$ and 1.1294 €/$, with a small setback after the ECB meeting.

Slight weekly loss for Xetra-Gold

The influence of the Euro/US Dollar exchange rate on the price of Xetra-Gold has been manageable. From 37.00 €/gram last Thursday morning, it had slipped to a weekly low of 36.75 €/gram by Thursday afternoon. Similar to the gold price in US dollars, Xetra-Gold then rose steadily until Wednesday evening to its weekly high of 37.35 €/gram. Yesterday's trading saw falling gold and rising euro/US dollar exchange rates. The precious metal is currently quoted at approx. 36.90 €/gram.

The markets in general are keeping an eye on developments in the various US trade conflicts, and the stock markets are awaiting US quarterly reports.

I wish all readers a great weekend, and a good time to all those taking time off for an Easter vacation. 

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