Signs of recovery

Due to the scarcity of economic data releases through Friday of this week, a somewhat lower market volatility was to be expected compared to the previous week. Coming up on Friday, the eurozone purchasing managers’ indices, a leading indicator for the financial markets, will attract a great deal of attention. Markets are also keeping an eye on the announcement of the new US treasury secretary, a position to be filled after 20 January. According to agency reports, the candidates were due to be interviewed on Wednesday, and their attitudes on the issue of trade tariffs, one of the central points of Trump’s election programme, will be deemed highly relevant.

Rising commodity prices

The so-called Trump 2.0 trades, conducted on the markets in the immediate aftermath of the elections (higher US treasury yields, followed by a strong US dollar, which in turn weighed on commodity prices), seem to have been concluded by the end of last week. Both the US dollar and US yields are down slightly since the beginning of this week, allowing commodity prices to recover.

Last Thursday morning, gold traded at 2,554 US$ per ounce, but by mid-morning it had dropped to 2,537, its lowest level since mid-September. After closing the week at around 2,560, prices rose step by step over the course of the week, reaching just under 2,655 US$ per ounce in European trading this Wednesday afternoon.

Xetra-Gold trading above 81 € per gram

The price of Xetra-Gold also rose sharply over the course of the week, from 77.90 € per gram last Thursday morning, or the intraday weekly low of 77.50, to 78.15 at the end of the week. There has been a noticeably stronger upward momentum to report thus far this week. Xetra-Gold rose to 81.05 € per gram this Wednesday afternoon.

Short breather ahead

The short-term development of the euro/US dollar exchange rate, which bottomed out just below the 1.05 mark last week, could depend on the above-mentioned eurozone purchasing managers’ indices data. Next week, the Thanksgiving holiday in the US will see a shortened trading week, which could dampen activity before things heat up again in December.

I wish all readers a successful rest of the week.