Gold update: gold reaches new record but then corrects

Gold has had a volatile week. In the night from Sunday to Monday, the gold price reached a new record. The increase was fierce: in just 30 minutes the gold price rose 3.5%. The old record stood at $2075 per troy ounce and dates from 2020. On Monday, the gold price rose to $2150 per troy ounce.

The bottom line is that trading was quite thin (few orders) and that a relatively large short position was sold, causing the price to rise sharply. Shortly after the sharp increase, the gold price normalized again.

The graph below shows the gold price movements last week:

The top in the graph is at $2120. Because the graph is built up by certain price levels at fixed times. As a result, the top of $2150 is not included.

Stronger than expected US job figures are putting pressure on gold prices
 
Gold prices moved around the $2025 level Tuesday through Friday afternoon. The US jobs figure was released on Friday at 2:30 p.m. The figure is a good indicator of the situation on the labor market. The expectation was an increase of 185,000 jobs in November. The actual figure was 199,000. The labor market is therefore performing better than expected.

Unemployment in the US fell from 3.9% in October to 3.7% in November. The US dollar remained relatively flat. Interest rates have been falling in recent weeks. In October, the 10-year interest rate was still 4.9%. Before the announcement of the jobs figure, the interest rate was 4.13%. On Friday, the 10-year yield closed at 4.24%.

Analysts saw the likelihood of interest rate cuts next year increasing as inflation falls sharply and the economy weakens. The jobs figure reduces the chance of an interest rate cut by the FED in March 2024. The ECB will probably start lowering interest rates earlier than the FED. The American economy is performing much better than the economy in the eurozone. This will put pressure on the euro in 2024.

The gold price had to take a step back. After the jobs figure was announced, the gold price fell from $2,029 to $2,000 per troy ounce. The $2000 level was tested several times. Ultimately, the gold price closed at $2004. In euros, the gold price fell to €59,791 per kg. In 2023, gold will have increased in value by 9.4%. Exactly in line with the average return over the last 20 years.

The silver price also rose on Monday, but much less quickly than gold. On a weekly basis, silver lost more than gold. The price even fell by €65 per kg, which amounts to 9%. The silver price closed at €685 per kg. This year, silver in euros is down 4.5%.

Next week, both the FED and the ECB will make the last interest rate decision of 2023. Both central banks are expected to leave interest rates unchanged.

Agenda

The number of bankruptcies in November will be announced in the Netherlands on Tuesday. That day, CBS will announce the inflation figure for November. In the US, the November inflation figure is also published. The FED will make an interest rate decision on Wednesday (8 p.m. Dutch time). It is the ECB’s turn on Thursday (2.15 pm).