Weekly market report by gold market expert Michael Blumenroth

Last Friday, the most precious of metals showed some activity when market participants had a first reaction to the US labour market data, forecasting a negative effect on the US dollar. This caused both the euro and gold to increase in value, with gold reaching a whopping 1,295 US$/ounce.

Over the weekend, a change of course set in; the greenback increased in value, especially against currencies of gold producing countries. Additionally, the news spread that major investors’ long positions in gold at the US futures exchanges had reached their highest levels since 2009 and silver had even climbed to an all-time high. One-sided positioning is all too often followed up by panicked liquidation as soon as the price shows a lasting movement in the opposite position. In anticipation of this risk and due to the stronger US dollar, commodities declined sharply, especially precious and base metals, as well as oil. In the course of these developments, gold, which traded at 1,279 US$/ounce exactly a week ago, fell to a weekly low of 1,257 US$/ounce on Tuesday. It has since been more or less mirroring the US dollar’s movements and slightly rebounded to its current level of 1,273 US$/ounce.

Compared to last week, Xetra-Gold was able to recover from 36.00€/gram – after a slump to 35.58 €/gram at its weekly low on Tuesday – to its current price of 36.12 €/gram, with the slightly weaker euro as an advantage. 

Later today, market participants are hoping for inspiration to come from the US retail sales data. Additionally, we await the publication of important Chinese economic data on Saturday. The upcoming weeks will continue to focus on discussions on the development of the global economy as well as the Federal Reserve’s interest rate increase policy.

A happy long weekend to all of you.