Gold is trying to recover some of the losses it endured at the end of last week after Friday’s US jobs data came in way above expectations.
Gold had surged above $1,900 an ounce and remained there for most of January on the prospect of the Federal Reserve soon ending its policy of interest rate hikes to curb persistently high inflation. The danger for gold was that the price was reflecting a state in the future rather than the facts on the ground as they were currently and the precious metal, therefore, needed every data point to align with where sentiment had mapped things out.
The massively positive jobs figures out of the US delivered the shock that gold investors were fearing as the strong state of the world’s largest economy gives the Fed plenty more room to continue its policy of rate hikes without fearing triggering a recession. With more hikes now likely, gold has suffered due its lack of yield making it less attractive at times of rising interest rates.
After plummeting about $90 an ounce on the back of Friday’s news, the strength of the support for gold will be tested over the coming days to see how quickly it can recover some of these losses at close back in on $1,900 an ounce. The plunge is a timely reminder of the risks of trading on sentiment rather than facts.
It is also a good time to draw attention to Kinesis Money’s digital gold product, Gold KAU, which generates a monthly yield for holders based on monthly transactions using the currency. So at times when gold is on a downward trend, the KAU provides holders with a return to soften the blow of the price dip.
Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
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