Gold has surprisingly fallen below the important psychological threshold of $1,800 an ounce amid a strengthening US dollar and after India, the world’s second-largest buyer of gold increased the import tariff on the precious metal.
This fresh plunge has seen gold fall to levels last seen in early February with the metal failing to prove itself immune to the wider sell-off on equities as investors once again are in risk-off mode as concerns increase that the global economy is heading for a recession.
Live Gold Price – $/oz
This unusual reaction where other risk-off assets such as the dollar, the Japanese yen and bonds are gaining yet gold has fallen markedly illustrates how much the likelihood of further large interest rate hikes by the Federal Reserve is dominating market sentiment. While rising interest rates are beneficial for the US dollar and bonds, gold’s lack of yield reduces its appeal to the extent that even a sell-off on equities hasn’t spared it from falling.
Having now fallen below $1,800, gold will need to quickly climb back above this key threshold to avoid the metal adopting a much lower range than the $1,820 to $1,850 an ounce range it had been operating for the last few weeks.
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