Weekly market report by gold market expert Michael Blumenroth

Throughout the now ending week, commodities were again the focus of investors, above all of course oil. In spite of the oil producing countries’ inconclusive meeting in Doha, the value of Brent as well as WTI increased significantly and briefly reached new record highs for 2016.

Precious metals performed even more impressively, with silver leading the chase for a change. Trading at 16.20 US$/ounce on Tuesday, it had risen to a new twelve-month high of 17.69 US$/ounce just two days later, the cause of which was heavy buying at the Shanghai Stock Exchange. In addition, silver alongside all other precious metals profited from the further depreciating US dollar, especially against producing countries’ currencies. Bullish stock markets also influenced commodities investors’ decisions as the economic apprehensions dominating the markets at the beginning of the year seem to have dissolved into thin air – at least for now. 

This situation gave off mixed signals regarding gold. On the one hand, investors are seeking it less as a safe haven, due to the fact that market sentiment across the stock and developing countries’ markets appear much more positive than at the year’s beginning. On the other hand, the gold price of course also benefits from the weakening US dollar against a number of offering countries’ currencies. As a result of the ambiguous situation, gold has been tracing the steps of silver throughout the week. 

Last Friday, gold traded at a daily low of 1,226 US$/ounce and had a hard time at the beginning of this week but picked up alongside silver, reaching 1,270 US$/ounce yesterday afternoon. However, with the sudden drop of silver by five per cent, gold followed suit and fell to 1,244 US$/ounce. While I am writing these lines, it trades at 1,246 US$/ounce, a small profit since last Thursday, but an increase of approximately 20 US$/ounce since Friday. 

Also on Friday, Xetra-Gold traded just under 35 €/gram as the day’s low after trading at 35.50 €/gram the day prior. Yesterday’s weekly high was just under 36 €/gram, and the precious metal currently trades at 35.55 €/gram following a short setback yesterday afternoon.  

Generally speaking, a number of market observers are expecting the favourable environment for commodities investments to persist. Next week’s Federal Reserve meeting might be a risk, if it were to explicitly remain open regarding a US key interest rate hike more aggressive than currently priced in on the market.

We’ll have to wait and see.

I wish you all a relaxing weekend and a successful start into the new week.