The price of gold calculated in euros fell by a good 6 percent after reaching an all-time high at the beginning of September. The fundamental and chart technical conditions speak rather for a continuation of the consolidation.
Gold price consolidated
Today, Tuesday at 14:30, the troy ounce of gold on the spot market cost 1,486 US dollars. This was equivalent to 1.334 Euro. The euro gold price has thus risen by 19 percent since the beginning of the year. After reaching an all-time high of 1,418 euros on September 3, 2019, the price has so far fallen by 6 percent. What are the prospects for the coming weeks?
First of all, there are two decisions to be made this week that are likely to have a strong impact on the euro-dollar exchange rate and thus also affect the euro gold price. In the UK, Prime Minister Prime Minister continues to work hard to get his country out of the EU with a treaty on 31 October. A postponement of the Brexit deadline to January is currently the most likely scenario. Anything else would be highly relevant to the share price. This applies to a timely deal and even more to a chaotic Brexit. In addition, the next interest rate decision in the Euro-Zone is scheduled for Thursday. This will be the last monetary policy session at which Mario Draghi will chair the ECB. On 1st November former IMF President Christine Lagarde will succeed him.
From a purely technical chart perspective, the euro gold price is weak in the short term. The chart has broken out of a flat wedge downwards. This increases the probability of an early test of the 1,300 Euro threshold. Towards the north, real price potential only emerges again from closing prices above 1,380 euros.
The political framework conditions in Europe and the general economic situation can at any time significantly accelerate this development in one direction or the other. The escalation of the trade dispute between the USA and the EU is likely to intensify market uncertainties. The first US punitive tariffs on EU goods came into force on Friday. This can be attributed to a response from European leaders. However, we believe that the negative momentum currently prevails in the euro gold price. In other words, we could see significantly lower prices in the near future if there were no fundamental changes in the underlying conditions.
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