Welcome to a very brief overview of the recent performance in the markets. The essentials are captured in the table below and each week we will show a chart of interest.
Gold had something of a roller-coaster last week, opening at approximately $1,460, dipping briefly below $1,455, running rapidly up towards $1,485 and then selling off hard on Friday to finish the week more or less unchanged. Politics drove the rally; economics drove the sell-off.
Obviously the market is continuing to monitor trade tensions as they drag on; this week is key as the deadline for the implementation of the next round of U.S. tariffs on Chinese goods is this Sunday 15th December (electronics, toys, computers); last Tuesday’s rally was driven by President Trump’s suggestion that he could wait until after the 2020 elections for settlement of the issues, along with heightened trade tensions between the United States and Europe, with a U.S. proposal to hand out tariffs of up to 100% on French cheese, champagne and other products. This morning (Monday) the markets are digesting the call from President Trump for the World Bank to stop lending to China; while Chinese trade figures for November show a 23% drop year-on-year in exports to the United States. China’s global exports were down just 1.1%.
The fall in gold’s price came after strong employment numbers from the United States. Nonfarm payrolls were up 266,000, well in excess of market expectations. This week sees the December meeting of the Federal Open Market Committee, with the Fed widely expected to leave rates unchanged, especially after the bullish employment numbers; the European Central Bank also holds its first meeting under the Presidency of Christine Lagarde and rates are expected to remain unchanged here also. Gold and silver are both steady this morning and we expect that these markets will be trading ranges for much of the rest of the year.
We note that the Chinese central bank is reporting unchanged gold reserves for the second month in succession and we believe that the Russian central bank is also approaching critical mass in terms of its gold holdings as a percentage of total FX. These developments will take a partial prop out of the market and may also affect sentiment.

Thought for the week
Gold tends to thrive both in deflationary and inflationary environments, but not so much during stable eras.
Chart for the week
The U.S. three-month to ten-year yield curve and the gold price; the inverse relationship broke down in the first half of this year when gold was doing very little, but has now been restored.
