Is the price of gold coming under even more fire?

The price of gold has come under pressure recently. Next Wednesday and Thursday, Fed President Powell will explain his monetary policy to the US Parliament. And there are other potentially price moving events this week.

 

Gold price recovers slightly

After the strong downward movement at the end of last week, the gold price stabilized somewhat today, Monday. At 9:30 a.m., the troy ounce of gold on the spot market cost 1,464 US dollars (+0.4 percent). This was equivalent to 1,329 euros. Silver was quoted at 16.92 US dollars (+1 percent) and 15.35 euros respectively.

 

Chart technically stricken

It is also a fact, however, that both precious metals are directly at critical technical chart marks from the perspective of three months or, as with silver, have already breached significant supports. For example, the Euro gold chart is scratching the lower edge of a falling wedge in the range of 1,330 Euro, while the Euro silver chart is basically already on its way to the next significant support at 14.80 Euro.

 

Fed President in cross-examination

This week, Fed President Jerome Powell will have to make a statement to the US Congress at the regular hearing (“testimony”). Twice a year the head of the Fed has to explain his institution’s monetary policy to the US Parliament and is pierced with questions before committees. On Wednesday at 5 p.m. (CET) he will address the Economic Committee on the economic outlook and on Thursday at 4 p.m. he will address the Budget Committee. Once again, the question is whether and when there will be further interest rate cuts.

 

Economic data

As for this week, there are also some important economic data releases coming out. The new ZEW index will be released on Tuesday at 11am. 400 analysts and institutional investors will be asked about their medium-term expectations regarding economic and capital market developments. On Wednesday at 14:30 new inflation figures from the USA will be released. On Thursday at 8 a.m. we will learn how the German economy developed in the third quarter. And on Friday, data on retail and industrial production in October will come from the USA.

 

Trade dispute

There have recently been slightly contradictory statements in the dispute between the USA and China. While Beijing spoke late last week of plans for a gradual reduction of punitive tariffs, Donald Trump tried at the weekend to maintain the tension(s). He said he had “agreed nothing” on the matter. Trump also said China needed an agreement more urgently than the US and that negotiations were too slow. So it will be interesting to see what turn the trade dispute will take this week. This should not leave the price of gold untouched.