Gold price volatility intensifies and could erupt again next week

August 15, 2019

Frankfurt (Aug 15)  In the European market on Thursday, spot gold fell rapidly, falling below $1510 an ounce at one point. Some of the gains after the rally have led to increased volatility in gold prices in recent days.

'The sky is the limit for the world's most important safe haven as gold clears the key hurdle of $1500, 'wrote Royston Wild, a freelance finance journalist.

Next, he points out, markets will keep a close eye on important data and central bank reports over the coming week for signs of new pressure on the global economy.

A flood of eurozone manufacturing and services PMI data will be released next Thursday, especially with the latest data in Germany likely to have an impact on investor confidence. Manufacturing PMI, the engine of the European economy, fell to 43.1 in July, further below the 50-year mark and the lowest level since the 2008 / 09 financial crisis. While the service sector remains good, with PMI expanding at 54.5 last month, it is crucial to prepare for a sharp decline in the coming weeks as the broader economy slows.

GDP data released earlier this week showed that the German economy shrank by 0.1 per cent in the second quarter, sparking speculation of a possible recession later this year.

Elsewhere, the Fed will release the minutes of its July monetary policy meeting next week, which could also boost gold prices. As signs of recession become increasingly evident in the US, the Fed has become more and more dovish this year. So if there are signs in the coming days that the Fed will cut interest rates further in the near future, gold will benefit from the twin effects of a weaker dollar and higher inflation expectations.

The minutes of the RBA meeting in August may give direct stimulus to gold prices. The RBA cut interest rates to a record low of 1 per cent in July, and the central bank is likely to announce that the rate cut has not yet been completed, which could prompt investors to move more from legal tender to classic hard currency gold.


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