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- Author of the entry: Mennica Skarbowa
- Date of entry:
The beginning of May brought a significant drop in gold prices. Last week, gold prices fell by 2.8%, which some investors saw as a long-awaited signal to buy. In Poland, due to the weakening of the dollar to a level not seen since October last year, the end of last week was the best opportunity to buy gold in a year.
Last Monday saw a continuation of the declines from before the weekend, with the dollar strengthening after the US Congress passed a federal spending package to remain in effect until September. However, the further depreciation of gold was offset by the closure of many European and Asian markets on that day. Similar, somewhat sleepy moods prevailed on the markets on Tuesday as well. Investors focused their attention on the Fed's two-day meeting and Wednesday's planned statement on further plans for US fiscal policy.
The Federal Reserve did not surprise anyone by keeping interest rates unchanged. According to Fed officials, US inflation is approaching its target level and the labor market is strong, which should allow for a tightening of monetary policy as early as June. Investors' appetite for risk increased, the dollar strengthened, and gold fell to its lowest level in a month.
The crossing of the 50- and 200-day moving averages led to further declines, which were supported by the receding risk of Marine Le Pen winning the French presidential election. The spot price of an ounce of gold fell on Thursday to USD 1,225.20, just above the resistance level of USD 1,221/oz.
On Friday, despite a significant weakening of the dollar against the euro (the pair reached 1.0998 that day, the highest level in nearly six months), gold prices rebounded slightly. In the second half of the session, however, they returned to the USD 1,227-1,229/oz range, closing the week at USD 1,228.05 on the London Stock Exchange and USD 1,227.90 across the Atlantic.
In Poland, in PLN terms, the end of last week brought the best buying opportunity in a year. Due to the weakening of the dollar (even to 3.8242), which rarely accompanies declines in gold prices, Poles paid just over PLN 4,700 per ounce of gold on Friday.
The Federal Reserve did not surprise anyone by keeping interest rates unchanged. According to Fed officials, US inflation is approaching its target level and the labor market is strong, which should allow for a tightening of monetary policy as early as June. Investors' appetite for risk increased, the dollar strengthened, and gold fell to its lowest level in a month.
The crossing of the 50- and 200-day moving averages led to further declines, which were supported by the receding risk of Marine Le Pen winning the French presidential election. The spot price of an ounce of gold fell on Thursday to USD 1,225.20, just above the resistance level of USD 1,221/oz.
On Friday, despite a significant weakening of the dollar against the euro (the pair reached 1.0998 that day, the highest level in nearly six months), gold prices rebounded slightly. In the second half of the session, however, they returned to the USD 1,227-1,229/oz range, closing the week at USD 1,228.05 on the London Stock Exchange and USD 1,227.90 across the Atlantic.
In Poland, in PLN terms, the end of last week brought the best buying opportunity in a year. Due to the weakening of the dollar (even to 3.8242), which rarely accompanies declines in gold prices, Poles paid just over PLN 4,700 per ounce of gold on Friday.
Marianna Wodzińska
Head of Trading
Mennica Skarbowa S.A.
