Consolidation phase...

As the runners among you will know: After a strenuous climb or run, a period of rest and recovery is essential. Gold prices currently appear to be in such a phase. After the record highs of the past two weeks, the air has become somewhat thinner.

There was slight profit-taking at the end of the quarter on Monday. The Fed governor’s statements indicating that the monetary authorities would take their time for interest rate cuts also slowed down gold prices. After all, they benefit from low interest rates and yields.

Financial markets: keeping an eye on US and Middle East

September US labor market data, due to be published on Friday, is likely to be decisive for the financial markets’ short-term sentiment. Should it turn out unexpectedly weak, market players are likely to price in robust interest rate cuts by the Fed, which could support gold prices (and vice versa) if they turn out better than projected. Traders will also be keeping an eye on developments in the Middle East. Yesterday already saw headwinds for the stock markets, falling yields on government bonds regarded as safe havens, a sharp rise in oil prices and a moderate rise in gold prices.

Gold investors end quarter with profit-taking

Last Thursday morning, the precious metal traded at 2,661 US$ per ounce, jumping to a record high of 2685.50 intraday, before profit-taking at the end of the quarter caused it to drop to 2,625 on Monday. After rising to 2,673 last night in response to the escalating situation in the Middle East, the gold price again retreated somewhat. This morning at 8:00, gold will start European trading at roughly 2,650 US$ per ounce.

Xetra-Gold reaches all-time high of 77.65 € per gram

The Xetra-Gold price also reached a new record high, albeit somewhat later than the US dollar gold price, due to yesterday’s weakening of the euro. It initially climbed from 76.75 € per gram last Thursday morning to 77.35 on Thursday afternoon, dropping to 75.70 on Monday before reaching its current all-time high of 77.65 yesterday afternoon. This morning at 8:00, Xetra-Gold is likely to start the European trading day slightly lower around €77.00 per gram.

The situation in the Middle East and US labor market data are likely to dominate the markets until the end of this week.

I wish all readers a pleasant (German) public holiday and happy extended weekend to anyone taking Friday off.