Wait and see

Although there has been some movement in the markets and we have seen the release of various economic data in recent days, gold prices are currently not far from last week’s levels.

The US labor market report for May turned out slightly better than expected, lifting spirits at the end of last week, especially on the stock markets. The US dollar strengthened slightly, but gold dampened. The last-minute US-Chinese trade talks in London at the beginning of this week, aimed at de-escalating the trade conflict, also weighed on gold prices, as the markets hoped the talks would lead to an easing of tensions.

Geopolitics and trade conflict drive gold demand

Gold was supported by lower-than-expected May inflation data from the US, which was published yesterday afternoon.

This led to a moderate decline in yields and put pressure on the US dollar. Yesterday evening, US President Trump announced that the US would send letters to its most important trading partners in the next two weeks on unilateral tariffs or tariff increases if no rapprochement or agreement was reached beforehand. In addition, the US is withdrawing some of its embassy staff from Baghdad due to fears that the security situation in the Middle East could deteriorate if negotiations with Iran fail. Gold, hence, regained its status as a safe haven.

Last Thursday morning, gold traded at 3,365 US$ per ounce and had risen to 3,403 by the afternoon but suffered losses later in the day. The decline accelerated following the release of US labor market data, closing Monday’s trading at 3,293. Gold then traded sideways temporarily, between 3,300 and 3,340 US$ per ounce, before rising to 3,377 last night for the reasons mentioned above. The precious metal kicked off trading today around 3,375 US$ per ounce.

Slight week-on-week loss for Xetra-Gold  

The Xetra-Gold price also temporarily came under pressure, particularly on Friday, initially rising from 94.85 € per gram last Thursday morning to 95.75 on Thursday afternoon, with an intraday downturn mirroring the development in US dollars, and bottoming out at 93.30 on Monday. Most recently, the euro appreciation against the US dollar has kept prices somewhat in check. If the Xetra-Gold price holds steady, it is likely to start trading today at 94.10 € per gram.

In the coming days, the focus will remain on customs and geopolitics, as well as the numerous central bank meetings, in particular the Fed meeting on Wednesday.

I wish all readers a summery weekend.