Gold is slipping ever closer to $1,900 an ounce in the face of a strong US dollar and the prospect of interest rates rising again in September and staying at a high level for the foreseeable future.
The fact that gold has been able to hold above the $1,900 threshold for so long is indicative of the fragility of investor confidence and retaining appeal for gold’s haven qualities. Yet as economic data continues to show employment remaining healthy and inflation tracking downward, particularly in the US, the hope remains that a global recession can yet be avoided and the central banks’ juggling act of raising rates sufficiently to curb inflation without triggering an economic downturn will prove successful.
In this environment of high interest rates and market confidence slowly flowing back to encourage a riskier approach among traders and investors, it is hard to see gold making any gains and instead the controlled slide downward looks set to continue.
It will be interesting to note gold’s reaction as and when the price touches $1,900 an ounce. Given the underlying institutional support for the asset, this relative cheapness could prompt a fresh wave of buying from Asian buyers in particular and slow gold’s decline. If however there is a limited reaction, it would show that gold has fallen out of favour and the price will continue dropping.
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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