Like an overladen Spanish galleon, gold sunk to a monthly low.
Here’s what happened to the precious metal
- Last week, the U.S. dollar recovered rapidly and we saw gold decrease during Thursday’s trading session falling a significant 2.7% to 1,221.90 $ per ounce.
- On a weekly basis gold’s performance went as low as 3% to 1,216.62$ per ounce, the worst of the last four weeks, and it opened this week even lower at 1208$.
Let’s take a quick look at what’s been happening to gold:
- The price of gold gained more than 14% from the start of the year amid widespread pessimism on the state of global economy
- However, the good news for gold began to turn sour last week as data out of the US pointed to a stronger economy.
- There were upward revisions of previous weeks’ data that suggest the labour market is stronger than initially estimated and on Friday, data released showed the US economy grew 1.4% in the 4th quarter – beating estimations of just 1% growth.
- This led to Philadelphia’s Fed President Patrick Harker stating that the U.S. low unemployment rate could ultimately have a positive effect on inflation levels and that policymakers may be forced to vote for an interest rate increase during their next meeting on 26 April.
- As the dollar increased, gold, an inversely correlated market, felt the pinch and reversed its gains ending on a month low.
Let’s take a quick look at what else is coming up this week
- On Thursday at 11:30 GMT, the European Central Bank is meeting and will release the meeting’s accounts. Forecasts are that the ECB might increase its monetary stimulus program and even trim interest rates lower into negative levels.
- Economic data is also expected about the Chinese economy with the Manufacturing PMI report due on Friday 01 April at 01:00 GMT. This may shed more light on the currently worrying state of the world’s second largest economy.
That’s it for this week. Which way are you going on gold this week? Long, short or staying on the fence for now? Let us know your thoughts by sharing this video!