Gold is perking back up towards $1,930 an ounce as a slightly weaker US dollar has enabled gold to recover some of its recent losses.
Economic fears are receding with the odds of a recession on the S&P 500 Index now only at 22% compared with a 98% chance back in October 2022, according to JP Morgan. Given that one of gold’s primary roles is as a safe haven asset to protect investors at times of economic downturns, the medium-term prospects for gold if the US economy does manage to avoid a recession look more challenging.
For the short-term at least gold is managing to hold up with brief upsurges like today mixed in among a broader downward trend that will likely see gold ultimately fall below $1,900 an ounce in the coming weeks. Later this week brings the latest US inflation data and this will be another key data point for traders and investors to price in the likelihood of the Federal Reserve keeping interest rates unchanged at the committee’s meeting later this month, particularly if inflation is showing to be tracking closer to the bank’s 2% target.
However, while US interest rates may not go any higher, they do look set for a period of being higher for longer, which will chip away at gold’s appeal, given the physical metal’s lack of yield. So enjoy plus $1,900 an ounce gold while it lasts but the next phase looks increasingly challenging.
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.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.
