Weekly market report by gold market expert Michael Blumenroth

It has been a difficult week for the majority of market observers without a clearly distinguishable trend. The stock markets were extremely volatile and the propensity for risk taking fluctuated daily.
On Wednesday, for example, market participants with a higher risk readiness were rewarded with stock markets recording significant gains. On Thursday, traders more averse to risk triumphed, following the strong rise of the Yen indicating a flight into safe havens: government bonds, the Swiss franc and Gold all marked an inflow of assets. Last night, the Japanese Nikkei index considerably recovered, a fact which in turn could serve to lend today’s European and US stock markets a helping hand.

Generally speaking, the markets are fluctuating between feelings of concern regarding the global economic development and excitement regarding the central banks’ continuing expansive money market policy. 
The gold price is far from being immune to the other markets’ volatile behaviour, usually displaying a development opposite to that of the stock markets. From 1,234 US$/ounce last Friday, the gold price fell to 1,209 US$/ounce that afternoon. By Tuesday, it had recovered to above 1,230 US$/ounce and reached its weekly high on Thursday at 1,243 US$/ounce – an expression of unrest in the stock markets. Currently, the precious metal trades at a level similar to that of a week ago, at 1,233 US$/ounce. 

The price of the euro against the US dollar seems to be fixed with a rubber band at 1.14, snapping back no matter what happens across all other markets. The price of Xetra-Gold fell from 34.85 €/gram last Friday to 34.30 €/gram, but rebounded to 35.24 €/gram yesterday and currently trades slightly higher than a week ago, at 34.90 €/gram.

In the present market environment, it is hard to make valid forecasts for the following day, so let’s wait and see. At present, gold seems to primarily serve as a safe haven.

Please note that the next market commentary will be published a day early next Thursday, due to the Invest fair in Stuttgart.

I wish you all a sunny spring weekend.