Increasing volatility

Since last Thursday, gold prices have not only reached new record highs – they have also experienced short-lived, sharp price setbacks. Initially, gold continued its record chase, touching 2,955 US$ per ounce last Thursday and around 2,956 US$ per ounce on Monday. This was, amongst other factors, due to unusually strong demand for gold ETCs and ETFs. Last week, investors around the globe added a net 52.4 tons of gold to their holdings, worth around US$5 billion, according to Bloomberg data. It was the strongest weekly demand since March 2022, shortly after the start of the Russia-Ukraine war. This Monday, the buying mood remained unbroken with an investment sum of around 1.89 billion US$, roughly 642,000 ounces.

Slight setback on Tuesday

The situation became more complicated on Tuesday. After unexpectedly weak data on US consumer confidence, US stock markets came under pressure, as did oil and various other commodities and assets. While gold prices often benefit from other markets’ turbulence, last Tuesday saw many market participants taking profits from gold positions to cover losses in other market segments to stabilize their portfolios or increase their liquidity. The gold price accordingly dropped by around 50 US$ per ounce but recovered quickly.

The volatility continued yesterday. It is possible that the speculative long positions on the US futures exchanges are currently somewhat too high, which would mean that a temporary correction cannot be ruled out. In the short term, volatility could remain high.

Gold in US dollars at record high on Monday

Last Thursday morning, the gold price stood at 2,946 US$ per ounce and, as mentioned above, climbed to a new record high of 2,956 US$ per ounce on Monday. In the turbulent phase following the publication of poor US consumer confidence data on Tuesday, it dropped within the hour from just under 2,945 to 2,889. On Wednesday morning, the precious metal again rose to 2,930 but fell back to 2,891 in the afternoon, creating market conditions which were not for the faint-hearted. This morning, gold started the new trading day at 2,920 US$ per ounce but had slipped back to 2,895 by 7:00.

Xetra-Gold hovers around 90 € per gram

The Xetra-Gold price reached a new record high last Thursday but was slowed down somewhat by the rising euro exchange rate against the US dollar, among other things. It initially rose from 90.80 € per gram on Thursday morning to 91.10 on the same day but had dropped to 88.50 by Tuesday afternoon. After recovering to 89.50 yesterday, Xetra-Gold is likely to start trading today at a slightly lower 89.00 € per gram this morning.

Tomorrow (Friday) will see the publication of US inflation data. Next week, various US data is scheduled for publication and the decision on whether the US will go through with imposing import tariffs on goods from Canada and Mexico as early as March 4 is pending. This could cause some market fluctuations.

I wish all readers a happy carnival weekend.