Third week of gains, gold benefits from weak dollar

Last Monday did not bring any significant changes on the international arena or economic data that would affect gold prices. Throughout the day, the price fluctuated within a narrow range of around USD 1,255 per ounce. Gold's relatively strong position after the weekend was mainly influenced by the turmoil surrounding Russia's alleged influence on the results of the recent US presidential election. Any scandal surrounding Donald Trump significantly weakens his real ability to carry out the reforms he promised during his campaign to boost the US economy.

On Tuesday, gold gave up some of its recent gains and fell from its highest level in nearly a month, awaiting guidance on the Federal Reserve's plans for an interest rate hike in the second half of the year. However, it did not take long for prices to rebound from a weekly low of $1,244.50/oz and continue to rise. This was undoubtedly due to weaker-than-expected data from the US real estate market, which clearly shows that the Fed is looking in vain for inflation to rise.

However, gold benefited primarily from the lack of signals regarding the timing of the next interest rate hike and the Fed's declaration regarding the "relatively rapid" start of the process of reducing its balance sheet. Gold soared above $1,264 per ounce on the spot market, and the EUR/USD pair rose to 1.1780, a level not seen in over two years.

Thursday brought a slight correction, triggered by a rebound in the dollar, which benefited from positive data from the US economy regarding exports of key products. However, gold prices remained just a few dollars below the USD 1,260/oz level exceeded the previous day.    

However, Friday's data on US inflation and GDP for the second quarter left no illusions about the possibility of imminent Fed intervention in the area of interest rates. Gold was also indirectly supported by North Korea, which launched more ballistic missiles, triggering demand for physical gold among investors seeking a "safe haven."

The price of an ounce of gold exceeded USD 1,270 on that day, reaching its highest price in six weeks and closing the week in positive territory for the third time in a row. The overseas stock exchange closed at $1,270.10 per ounce, and at the end of the week, Polish investors had to pay just over PLN 4,600 per ounce of gold.  

MW