Gold 1732,40
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EURUSD 1,172
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DJIA 35135,50
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OIL.WTI 68,125
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DAX 15775,50
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The market opening on Monday night was a cold shower for the yellow metal bulls. In a low liquidity environment, gold collapsed sharply by $80 at once. Yes, the price rebounded slightly after stops were removed. However, the trend is worrisome.
XAUUSD
We are all well aware of the fundamental reasons that should lead to the rise of the gold metal. First of all, inflation is accelerating around the world. However, gold stubbornly refuses to rise towards the $2,000 per troy ounce level.
Let’s consider what other fundamental reasons there are for this. So far there are two.
In one case (not the most important, but important), we are talking about the fact that after the highest historical prices last year, the gold mining companies have increased the production volume. This means that the supply of yellow metal to the market has also increased. Everything is logical. On expectations of growth of cost up to 3 or even 4 thousand dollars (as trumpeted by analysts), gold mining at mines with higher production costs began.
According to statistics, in the first half of 2021, gold production amounted to 1,784 tonnes. This is almost 10% more than what was produced last year. Moreover. This is the highest level in the last 20 years.
The second was affected by the coronavirus epidemic in India. It has sharply reduced the production in the local jewellery industry. Consequently, the demand for gold has fallen sharply. And this is huge by the standards of the market, 500 tons of physical gold.
So we have two factors. One increased the supply of gold metal in the first half of 2021. And the other has reduced it. We think this is one of the main reasons why gold is not rising following other commodity groups.
The following development seems logical. As the situation with coronavirus improves in Asian countries, and above all in India, demand for physical gold in the jewelry industry will rise again. This will lead to an increase in the value of the yellow metal.
08.00 German consumer price index for July
14.30 US Consumer Price Index for July
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