Market Report

France election: Short-term gold weakness provides opportunity for further purchases

The first round of the French presidential election is over – and there is ample reason for concern: Almost every second citizen has voted for radical forces in France. But the stock markets reacted with relief, gold was instead under massive pressure. And again the familiar swan songs on gold can be heard.

This market reaction is, however, dangerous and short-sighted, as the bullion dealer “MP Edelmetalle”  outlines on his blog. The trader points out that the price volatility remains at a high level. After all, the geopolitical risks such as the North Korean conflict or the forthcoming Brexit negotiations do not give cause for easing. And France has not, whether with Marine Le Pen or Emmanuel Macron, been perceived a reliable partner in the EU for a longer time.

MP Edelmetalle reported in its blog post that long-term investors were not impressed by the price decline, but took advantage of this decline in gold prices to expand their precious metals holdings. An important chart technical signal has been set with the overcoming of the 1250 dollar mark. And the current strength of the euro should soon be over, so investors in the euro area soon expected to benefit over-average from rising prices for gold in euros again. Because interest rates in Europe will not rise for the foreseeable future and the Fed cannot afford significantly higher interest rates, gold will continue to remain relevant as an inflation hedge.

About the author

Sebastian Wieschowski