The dollar is currently stronger than it has been for a long time. Weak inflation data from Germany have significantly revalued the US dollar. The trade-weighted dollar index is higher than it has been for a good two and a half years. This factor and strong equity markets have ensured that gold has fallen significantly. At 1,467 US dollars per troy ounce, gold is currently marking a two-month low.
High interest in gold
In the week of 24th September the general interest in gold increased significantly and led to record demand. This is shown by the Commitments of Traders report of the US Commodity Futures Trading Commission. The number of open contracts rose from 631,000 to 658,900, an increase of around 4.4 percent.
Gold in euros not quite so bad
As Commerzbank writes, the gold exchange rate has held up better against the euro than against the dollar. The bank cited the different currency developments as the reason. Nevertheless, the price of gold in euros fell to 1,347 euros per troy ounce. On Monday, there were ETF inflows due to buying interest in the low price level. However, these inflows were not sufficient to reduce the fall in gold prices.
Golden Week in China to blame?
Some analysts see holiday week, including Golden Week, as the main reason for falling gold prices in China. During this time, the Chinese are virtually not participating in gold trading. In recent years the gold price has come under pressure again and again during this period, but not as massively as in this one. The Golden Week can hardly be the sole reason.
In view of the current political situation, the decline in the gold price seems to be more of a natural correction. For the threat to ban Chinese stock companies from the US stock markets, the examination of a suspension procedure by US President Trump and the imminent decision in Brexit are factors of concern.