Gold remains around the $1,950 an ounce level it has been oscillating around for the last week or so as expectation mounts that the Federal Reserve will indeed keep interest rates where they are when its much-anticipated announcement is released later today.
Yesterday’s US inflation data that showed another decline in the pace at which consumer prices are rising has all but confirmed market expectation leading up to today’s rate decision that the Fed will indeed press pause.
With the gold price typically struggling when interest rates are rising, the physical metal not providing investors with a yield, the prospect of the Fed holding off on a further increase at today’s committee meeting first helped rise above $2,000 an ounce back in May and has since helped keep it at levels that remain historically high.
For yield-seeking investors, gold KAU offers the best of both worlds, the security of a physically-backed asset combined with a monthly yield based on transactions using the digital currency in the previous month.
While today’s announcement looks like a done deal, attention will swiftly switch to where the Fed will send interest rates over the rest of the year. Here expectation has shifted with traders not forecasting a September peak, rather than the July one previously anticipated.
This would present a further headwind for gold right at a time when an increasingly buoyant stock market is reducing the metal’s safe-haven appeal and suggests that the highs achieved in May are likely to remain the peak for the year.
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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