Gold rush

While the most recent rush of prospective buyers for gold did not quite rival the California gold rush of the 19th century, it was still impressive – likely primarily due to the rapidly changing news situation regarding US tariffs on Canada, Mexico and China. At the end of last week, there were increasing signs that US President Trump would indeed sign executive orders for punitive tariffs over the weekend. In the run-up, gold was in demand as a safe haven and reached new record highs on Thursday afternoon, jumping above the 2,800 US$ per ounce mark for the first time on Friday.

Demand at record high

On Monday night, prices corrected downwards by another one per cent, although Trump did set the tariffs in motion on Tuesday morning, the date they came into force. However, this resulted in a significant appreciation of the US dollar and a sharp rise in US government bond yields, which initially weighed on gold prices. After the tariffs against Mexico and Canada were suspended for one month, the US dollar and US bond yields softened, which in turn had a boosting effect on the gold price. The extremely confusing US trade policy situation is likely to have resulted in follow-up purchases of gold as a safe haven. Also, reports on record-breaking gold prices may have attracted trend-following buyers. It came as no great surprise that the World Gold Council reported demand for gold in 2024 had reached a new record of 4,974 tonnes, and central banks had again been major buyers in the final quarter.

Gold price around 100 US$ per ounce higher week on week

In what has been a fertile environment, gold rushed from record high to record high this week – not only in US dollars, but in almost every currency. Last Thursday morning, it traded at 2,761 US$ per ounce, climbing to 2,817 on Friday and then sliding to 2,777 on Monday night. In the days that followed, gold buyers drove it even higher. With only short respites, the precious metal continued its rise to around 2,882 US$ per ounce yesterday afternoon, before the first profit-taking set in. It kicked off today’s trading at 2,860, almost exactly 100 US$ per ounce above the previous week’s level.

Xetra-Gold followed a similar trend, with fluctuations in the euro/US dollar exchange rate causing the price at the start of trading on Monday to be noticeably higher than the closing price on Friday. It rose from 85.25 last Thursday morning to a record high of 88.90 € per gram yesterday afternoon. This morning, Xetra-Gold is expected to start the trading day at around 88.55 € per gram.

Markets continue to closely watch US

A break in the gold price rally would be understandable – but in this dynamic environment, it is impossible to predict what will happen next. We will be watching closely for tomorrow’s release of US labour market data, which has the potential of moving the markets – and they will certainly keep an eye on US financial and trade policy decisions.

I wish all readers a relaxing weekend after this spectacular trading week.