Consolidation phase

We are moving through a transitional week: following Monday’s public holiday in the UK, Japan and South Korea, there is a bank holiday coming up tomorrow for various central European countries, with a long weekend sure to follow for many. And, more importantly, the US is not publishing any market moving economic data this week.

Last week saw a higher degree of commotion, with various data releases reverberating slightly into the current week. After somewhat weaker-than-expected US labour market data and the Fed governor’s statement that investors should not expect further interest rate hikes from the Fed, government bond yields continued to retreat at the start of the week. The stock markets, on the other hand, rose, while oil prices remained under pressure. Overall, this made for a fairly risk-friendly market environment, with mostly low volatility – even trading in the Japanese yen calmed somewhat after last week’s turbulence. Gold, as a result, traded mostly sideways.

Gold in US dollars at previous week’s level

Last Thursday, the precious metal traded at 2,319 US$ per ounce. After briefly slipping to 2,277 on Friday afternoon, it had regained the 2,300 mark by the end of the day. On Monday, amid sparse trading (public holiday in London), it reached this week’s high (thus far) at 2,332 and has since remained mostly within sight of 2,320. Today (Wednesday), European trading at around 8:00 was expected to start at 2,319 US$ per ounce – almost exactly last week’s level and that of Thursday two weeks ago – a clear indication of a consolidation phase.

Xetra-Gold at weekly high on Monday

Xetra-Gold dropped from 69.55 € per gram last Thursday morning to 67.95 on Friday afternoon. On Monday, it also rose to a weekly high of 69.50. This morning, Xetra-Gold was expected to start trading at around 69.35 € per gram.

More relevant data is coming up next week, and volatility on the markets could increase – especially after the publication of US consumer price data for April, coming up next Wednesday.

I wish all readers a happy bank holiday and possibly even a long, sunny weekend.