US dollar price of gold climbs to annual high

Market report Michael Blumenroth – 09.06.2017

Weekly market report

At the beginning of the week, gold once again benefited from its status as a safe haven. Due to unexpectedly weak US labour market data, the precious metal already had climbed from 1,261 US$/ounce to 1,280 US$/ounce last Friday. As a result, the US government bond returns dropped to new annual lows – and the gold prices reacted as was to be expected: low returns mean rising gold prices. Tensions in the Middle East caused by the severance of diplomatic relations to Qatar added to the development, as did the suspense prior to the former FBI director James Comey’s testimony in a Senate hearing and Britain’s general election. Safe havens such as the yen and government bonds alongside gold were in high demand. The precious metal climbed to a new annual high for 2017, to 1,296 US$/ounce on Tuesday afternoon. It weakened in the days that followed and slumped yesterday afternoon, when the US dollar strengthened against most currencies and US returns also resurged. Yesterday afternoon, gold hit its weekly low at 1,271.50 US$/ounce and currently trades at 1,274 US$/ounce – a week-on-week profit of just above one per cent. 

In euros, we see a similar weekly profit: Xetra-Gold also rose by more than one per cent week-on-week, from 36.15 €/gram last Friday to a weekly high of 37.00 €/gram on Wednesday afternoon and its current price of 36.60 €/gram.

Today’s focus will most likely be market participants’ reaction to the unexpected election results in Britain. Next week, market players are likely to shift their attention westwards: the Fed will most likely raise the key interest rate by 25 base points on Wednesday evening, and in her eagerly awaited statement at 8.30 p.m. CET on the same evening, Janet Yellen is set to announce further steps.

I wish all our readers a relaxing and sunny weekend.

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