Waiting for new signals

Market report Michael Blumenroth – 12.08.2016

Weekly market report

Summer vacations are coming to an end and the markets have calmed down. But not everywhere.
In precious metals, the past week has seen the strongest volatility in platinum and palladium. Both metals rose following Wednesday’s good sales figures for automobile sales in China but started to slump a day later.

The gold market saw less movement, with the strongest spike last Friday. The gold price steadily rose until it reached the mark of 1,365 US$/ounce on Friday morning. The US jobs report showed a higher number of jobs had been created than expected by analysts. This fact fuelled speculations for new interest rate increases by the Fed until the end of the year, which in turn caused the US dollar to significantly rise against most other major currencies. Higher interest rates in the US and a stronger US dollar are usually bad news for the gold price, which took a downward turn and reached its weekly low on Monday morning at 1,330 US$/ounce. 

Market movement following the publication of US job market data is usually not as bad as it looks. Accordingly, the US dollar slumped during the course of the week and the gold price had recovered to 1,357 US$/ounce by Wednesday, which was, as mentioned above, an excellent day for all precious metals. With a slightly stronger US dollar and platinum and palladium under pressure, gold headed downward to its current 1,340 US$/ounce. 

Xetra-Gold performed with a relatively similar price pattern: from 39.40 €/gram last Friday morning, it fell to its weekly low of 38.60 €/gram over the weekend and recovered to 39.10 €/gram on Wednesday before easing back to its current price of 38.70 €/gram. 

Due to seasonal effects, the months July to September usually see sluggish gold prices. This rule does not seem to apply this year, in spite of record levels at the US stock markets and a record high for the DAX: gold remains in high demand as a safe haven.

This afternoon we await the publication of US economic data and a number of other economic data will follow suit next week. It will likely be a calm week before the interest rate policy picks up speed, which will most likely happen by September, and the approaching US presidential elections will further heat up the markets. 

A great weekend to all of you and perhaps even a few last rays of holiday sunshine.

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