Gold is sitting comfortably above $1,950 an ounce with the price having perked up on the expectation that the Federal Reserve’s battle to curb high inflation is proving successful and the end of the bank’s series of interest rate hikes is drawing near.
The recent price action is curious with both equities and gold benefiting from the Fed’s interest rates peaking later in the year. Yet before any pause comes, another hike later this month seems almost certain with a high likelihood of a further increase in September.
The danger therefore is for gold that its buoyancy is based on a future scenario still a couple of months down the line and any changes to that trajectory could really cause the price to tumble.
The fact that gold was able to stay above $1,900 an ounce for so long before its recent climb back above $1,950 underlines the strength of underlying support there is for this safe haven asset with market confidence still fragile. Now with market confidence improving and equities gaining, the current gold price starts to look unsustainably high.
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.
