It’s unstoppable...

It’s hard to believe, but gold was temporarily trading at around USD 2,970 per ounce on Wednesday of last week – below the magic threshold of USD 3,000 per ounce. One week later it was temporarily trading at USD 3,332 – an increase of more than 10%. This means the precious metal has increased by around 27% in price since the beginning of the year.

Buyers of gold ETCs in particular have been on a spending spree in the past five days, with a significant rise in holdings worldwide. There are reports of sustained high demand primarily in China – not only for ETCs, but also for physical gold.

The main reason for the price surge is likely the strong demand for “safe havens” in the highly volatile market environment, particularly in the second half of last week. In contrast to the usual market movements when trading is marked by uncertainty, neither the US dollar nor US Treasuries were in demand as safe havens this time. On the contrary, they both came under considerable pressure as investors reduced their holdings in US bonds due to confusion and concern about the many twists and turns of US tariff policy. The number of commentaries underscoring the loss of confidence in the US bond and equity markets is increasing. Gold is likely to continue riding the wave of success for as long as the uncertainties regarding US trading policy and the recently escalating trade war between the USA and China persist – although temporary setbacks cannot be ruled out and the rally may lose a little momentum before long. 

Last Thursday morning, gold was trading at USD 3,122 per ounce (after temporarily trading at USD 2,970 per ounce the previous day, as mentioned above). One new record followed the next, before a leap of around USD 100 within just a few hours yesterday to USD 3,328.50 per ounce. A new all-time high of USD 3,357.50 per ounce was recorded last night. Gold started European trading today (Thursday) at USD 3,335 per ounce. 

Xetra-Gold was also trading at a record high yesterday. During normal trading hours, it initially dipped from EUR 91.50 per gram last Thursday morning to EUR 90.10 per gram later that day after the euro soared to a three-year high against the US dollar. However, it then moved sharply upwards, particularly yesterday, to a new all-time high of EUR 93.90 per gram. If the 7.00 a.m. level holds after the stock exchange opens, Xetra-Gold will start the European trading day at around EUR 94.50 per gram.

Liquidity is likely to decline over the long Easter weekend, which could result in either calm or unusually strong market movements (Monday is a normal trading day in the US). US trading policy remains the dominant topic. 

I wish all readers a pleasant and relaxing Easter break after the turbulence on the market.